The recent case of MPT Group v Peel decided in the English High Court on 16 May 2017 has, according to some commentators, called into question the extent of an employee's duty to tell his or her employer the truth.
This particular case concerned two reasonably senior employees of MPT who both held managerial positions. They conspired together to set up in competition with their employer. They downloaded, used and divulged to third parties their employer's confidential information such as its database of customers, quotations, suppliers, materials and costings and technical drawings.
Both employees were subject to restrictive covenants that prevented their solicitation or dealing with customers with whom they had personally dealt with for a period of six months.
After intimating their resignation both employees were questioned about their intention several times. On each occasion they gave different and untrue versions of what they intended to do. MPT sought to argue that the failure to give truthful answers was a breach of the principles of good faith and fidelity. The court stated that it would be reluctant to hold that when asked a straight question by his or her employer a departing employee is under a contractual obligation to explain his and her own confidential plans to set up in lawful competition.
I have seen some commentary to the effect that if the employees had been sufficiently senior there may have been fiduciary duties (ie higher duties) to the employer and, as a consequence, may be in breach of their contract of employment with the employer if they failed to give frank and truthful responses.
Whilst the conduct of the employees in lying to their employer would clearly have provided grounds for dismissal on the basis of gross misconduct I do struggle with any interpretation that an employee is perhaps not in breach of the contractual duties of fidelity and good faith when they lie to their employer in situations such as this. The intention behind the lie was clearly to cover up the fact that the employees intended to set up in competition with their employer. If the employee simply refused to respond then I would consider that not to have been a breach of the duty of good faith and or fidelity given that they have not lied. It could however form the basis again of a fair dismissal given the employees failure to follow a reasonable instruction from their employer, ie to respond to the question.
It is also important to note that the comments made by the High Court here were in the context of an application for interim injunction (interdict in Scotland) against the employees to enforce the restraints. They were accordingly made without the case proceeding to a full trial so there was not a full hearing of all the evidence and arguments.
My advice to employers would be to the effect that employees are under a contractual obligation to give truthful responses to questions even in circumstances such as these. That is of course subject to the caveat I have outlined above where an employee declines to comment (which is of course distinct from lying) and such refusal may provide a basis for a fair dismissal even during the notice period. However, watch this space!
If you would like any further information please contact the Davidson Chalmers Employment Team who will be happy to provide their expertise and advice.
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