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Wasn’t I allowed to do that?

May 2011 - Employment. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

More articles by this firm.

Termination of employment
It was not okay to summarily dismiss a sales manager who had bypassed management to make substantial changes in a distributor agreement because there was no description of the powers granted to him.
If an employer wishes to summarily dismiss an employee, the employee must be in material breach of the employment contract. But is it breach if the employee has not been informed of the limits of his authority? This question was recently considered by the Copenhagen Maritime and Commercial Court.
A sales manager at a production company was summarily dismissed for amending a distributor agreement to allow the distributor to sell a competitor’s products as well. This was contrary to the original distributor agreement between the production company and the distributor.
Senior management were speechless because the sales manager did not have the authority to make such an agreement.
The sales manager turned to his union. As he saw it, the summary dismissal was unfair. No description had ever been made of his duties and responsibilities and there were objective and commercial reasons for what he had done. In addition, his job was very independent. And, in his view, the fact that some time had passed before senior management reacted also ought to mean something.
Justified in believing he had authority
The Court ruled in favour of the sales manager. Although the sales manager’s failure to immediately inform management of the new agreement could be seen as a breach of trust, the act itself was not so serious as to warrant summary dismissal – but the company was justified in dismissing him with notice.
The Court took into account that there was no job description although the sales manager’s contract said that such a description existed. Accordingly, the sales manager had reason to believe that he was authorised to change the distributor agreement. Another factor that weighed with the Court was that senior management had failed to point out to the sales manager that there was an unusual provision in the distributor agreement. Also, management had failed to act when they became aware of the change in the agreement.
Norrbom Vinding notes:
  • that the case shows that, when assessing the seriousness of a breach, the Court will look at the nature of the employment relationship and it is therefore important for the employer to ensure that the employee is aware of the limits of authority he/she must act within.
The above does not constitute legal advice and should not be relied upon as such

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