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20th November 2020

Failure to act may amount to a breach of the implied duty of trust and confidence

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In Nair v Lagardère Sports and Entertainment UK the High Court confirmed that an employer could potentially be in breach of the implied duty of trust and confidence by failing to take action to ensure than an employee received a contractual bonus due from other companies in the same group.

The claimant was employed in a group of companies from 2006.  He sought payment of substantial contractual bonuses from two of the group companies. He had moved to one of the group companies in 2015 (New Company) but claimed that he had been led to believe for years that he would be paid the bonuses and as such resigned in 2017 and brought a claim against the New Company for breach of contract.  The claimant argued that it was an implied term of his employment contract that the New Company would not conduct itself so as to “destroy or seriously damage the relationship of trust and confidence” and that the term operated to require the New Company to take reasonable steps to secure that the other two group companies paid the bonuses due to him.  The New Company applied to strike out the claim.

The High Court refused to strike out the claim.  A significant bonus had fallen due from the group companies and at the time the claimant’s employment ended, entitlement to the bonus was clear. The Court confirmed that a failure to do something could be a breach of the implied term of trust and confidence, pointing out that conduct can take the form of a failure to do something or of positively doing something.

Previous claims for breach of trust and confidence have typically been based on unreasonable behaviour by the employer. This case indicates that the duty may extend further to cover a failure to take action. However, whether the claim is ultimately successful will depend on the evidence in each case.

For more information on any of the items raised in this article please contact a member of our Employment Law Team.