Case Update

The duty of good faith and the penalty doctrine

In Imam-Sadeque v BlueBay Asset Management, the High Court considered two important issues: whether the duty of good faith is reduced during garden leave and whether the penalty doctrine applied to a clause in a compromise agreement.

When Mr Imam-Sadeque, an asset manager at BlueBay, resigned he was not entitled to unvested awards under the terms of the incentive plan because he was not a "good leaver". However, he negotiated a compromise agreement which included a provision that he would be considered a "good leaver" and therefore entitled to fund units for 2012 if he did not breach the terms of his contract during his notice period (which included non-competition, confidentiality and non-solicitation clauses). BlueBay subsequently discovered that, while still employed, Mr Imam-Sadeque agreed to join and helped a competitor start up, disclosed confidential business information and was heavily involved in the