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Ben Jones
Ben Jones, Solicitor
Category: UK Law
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Experience:  Specialist in UK Law with expertise in UK Employment Law
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My ex employer is threatening to sue me over a breach of fiduciary

Customer Question

My ex employer is threatening to sue me over a breach of fiduciary duty. I believe he is using this to stop me going to employment tribunal. He is claiming that I passed over a potential contract to another company. I am not denying this as I did it because we could not make the product at the time and, as the customer bought other products from us, I was seeking to preserve the relationship. My employer was aware of this at the time, but is now using this to scare me off a tribunal. He is threatening to sue me for £200k, but I do not have the money to defend myself at the moment. ANy advice gratefully received
Submitted: 1 year ago.
Category: UK Law
Expert:  Ben Jones replied 1 year ago.

Ben Jones : Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today. Were you employed by them at the time of the alleged breach and what claim are you seeking to make against them?
Customer:

I was employed by them at the time (May 2011). I am seeking to claim wrongful dismissal from them. They put me on garden leave in November 2012 without reason (I had fallen out with the shareholders as I was trying to sell my shareholdings at the time). The MD met with me a week later and offered me £19k to go, I said no. After that time they made a number of allegations against me and dismissed me for gross misconduct in May 2013. I then applied to a tribunal - this is taking place on 16 September.

Customer:

I had been sales director for three years up until the fall out. Additionally I made a grievance against two of the shareholders (who are also directors) for bullying and intimidation. This latest episode with the them threatening to sue me is just a continuation of the intimidating behaviour I have had to deal with. My greatest concern is having to fund any legal action against them. Having being unemployed since last November with little likelyhood of getting another well-paid job prior to the tribunal, I am concerned as to how I will defend myself.

Ben Jones :

Hello again, sorry I was just going offline when I picked up your question last night. Whilst you may have a valid tribunal claim against your employer, it does not mean that they cannot have a valid claim against you for another reason, even if they are only going ahead with it because of your claim against them.


 


In terms of a breach of fiduciary duty, this duty is owed by directors of companies to their companies (only registered directors at Companies House are covered), as well as partners to fellow partners, trustees to beneficiaries and agents to principals.


 


If you were simply an employee and not a director, then there is an argument that you did not owe fiduciary duties, rather were just bound by the duty of fidelity under your contract. However, there has been case law (http://www.thrings.com/site/news_events/fiduciary_duty.html) which suggests that an employee can also owe fiduciary duties to his employer but only if these duties were clearly defined in their contract of employment. So first of all consider whether the above applies to you and if you are likely to be caught out by this.


 


In terms of what could happen next, if the employer does go ahead with a claim for breach of FD, as they are the ones making the claim it would be for them to prove that this was the case and that they have suffered losses as a result. To defend a claim you would not necessarily need a lawyer to represent you but of course that may help. If they are successful, the most likely outcome would be that they are awarded compensation for damages incurred as a result of your breach. If that does happen then you will have a county court judgment against you that the employer can try and enforce. Whilst you may not be able to pay the award, it does mean that the employer will have to try and enforce it in whatever way they wish, usually this can be by calling in bailiffs, by getting a charging order, attachment of earnings order or petitioning for your bankruptcy. If you simply cannot pay the award then there is not much that can be done and the employer may never get the money you owe them.

Customer:

What kind of proof would they need (as I didn't actually do anything?). Would they have to show that I was doing something nefarious? They are claiming that as I passed off the business to another company, this caused them damage. My defence is that I was protecting the integrity of the company by trying to preserve the customer relationship.

Ben Jones :

Are you a director at Companies House?

Customer:

yes

Ben Jones :

Or were you to be precise?

Customer:

I was

Ben Jones :

Director's fiduciary duties can be summarised as follows:



  • No conflict – you must not place yourself in a position where your own interests conflict with those of the other party or where there is a real possibility that this will happen.

  • No profit - you must not profit from your position at the expense of the other party.

  • Undivided loyalty - you must not place yourself in a position where your duty to another customer conflicts with your duty to the other party.

  • Confidentiality - you must use or disclose information obtained in confidence from the other party for their benefit only.

Ben Jones :

The employer will have to show that you had breached at least one of these

Customer:

Ben, thanks for that. Would them taking the case against me interfere with by tribunal? Also, how long does the suing process take - is it weeks or months?

Ben Jones :

No the two will be entirely separate al;though if they dismissed you because of the alleged breach then they can use that information in the tribunal claim

Customer:

Their lawyers have sent me a letter saying the matter is under PDPAC. They have asked me to respond by the 22nd. I have given an explanation for my actions before, but they say they don't accept it but have not offered their own version. Is my next action just to write a strong letter in return, or is there something else I can/should be doing?

Ben Jones :

Not much you can do apart from to rebut their claims at this stage. The matter is very much in their hands now - they are the ones with a complaint against you and they decide whether to take it further or not

Customer:

OK thanks for that Ben

Ben Jones, Solicitor
Category: UK Law
Satisfied Customers: 39018
Experience: Specialist in UK Law with expertise in UK Employment Law
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Ben Jones
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Specialist in UK Law with expertise in UK Employment Law