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A question we are asked time and time again is, whether I have to inform my employer where I am moving to? The reality is that everything is just a question of time, so you are only really delaying the inevitable. No doubt your new employer is just waiting for you to resign so they can release their own announcement informing the market of your impending arrival. But in that moment, when no doubt you want to do the honourable thing, how do you answer?
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What if you have something to hide? More than likely you are moving to a direct competitor, or perhaps you are setting up a business in competition, or do you know that some of your co-workers will resign shortly before or after you do? This can be a stressful time.

However, the general answer is no, you do not have to inform your employer of the whereabouts of your new home but (there’s always a but….) what if your employer asks you a direct question? Or you hold a regulated position? What if you hold a fiduciary position?

Your employer’s instant reaction to your resignation may be to ask you to go home and await further instructions. Once they have gathered further information they may invite you to a meeting to ask you further questions under the auspices of conducting an exit interview or an investigatory meeting. If you still do not wish to say anything what should you do? Well, you have a few options (in no particular order):

  • Tell the truth
  • Plead the fifth
  • Lie
  • Stay silent

It’s at this point that we need to remind employees of their implied terms of good faith and fidelity. In a well known case these duties were described as follows:

"The employee must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third party without the informed consent of his employer".

This duty continues throughout the duration of the contract and may also extend to the employee's off-duty time, but ceases when the employment ends. An analysis of the contract of employment and surrounding facts would need to be undertaken to decipher if the duty lessens during garden leave, and whether you hold a fiduciary or regulatory position. Fiduciary obligations may continue after the employment or directorship ends.

The duty of fidelity is probably the most important and wide-ranging of an employee's implied obligations. In the recent case known as MPT Group v Peel reported in May 2017, two senior employees resigned on the same day and set up a mattress making business together in competition with MPT. When asked by MPT what they intended to do they gave untruthful answers. They also denied they were going into partnership together. However, the judge held that whilst there was a duty to answer questions truthfully, he was “reluctant to hold” that a departing employee is under a contractual obligation to explain his own confidential plans to set up in lawful competition. The judge reminded MPT that the law will step in to prevent unfair competition or to hold employees to enforceable restrictive covenants or to protect confidential information. Equally, employees must not induce others to breach their own contracts of employment, conspire to cause their employer injury or, in most cases, solicit their colleagues for their new enterprise. Subject to these matters, employees are otherwise free to make their own way in the world. The position may have been different if the employees were sufficiently senior to owe fiduciary duties to MPT.

This case is a timely reminder that honesty is probably the best policy.

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Birketts and EC3 Legal announce merger

David Coupe, Senior Partner at EC3 Legal, said of the union: “The focus of EC3 Legal has always been on serving our clients' businesses. Following the merger with Birketts, I am confident that our clients will continue to be the biggest beneficiaries, as the two practices will be able to expand and develop the range of services on offer to new and existing clients.”


Posted 1 May 2020

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