- 02 Sep 2015
- Søren Eeg Hansen
A sales rep acted in breach of his duty of loyalty by participating in the operation of a business in competition with his employer. So the Danish High Court recently ruled.
Employees owe a duty of loyalty to their employer. This means, among other things, that employees are not allowed to engage in activities which compete with their employer. The duty of loyalty applies for the duration of the employment relationship. If an employee acts in breach of his duty of loyalty, it will usually justify summary dismissal. This is illustrated by this case from the Danish Western High Court.
A transport and logistics sales rep was dismissed for under-performance. After he had been given notice, the employer found out that he had participated in the operation of his daughter's transport business. On that basis, the employer decided to stop salary payments for the remainder of the notice period.
The sales rep was not happy about this and therefore issued proceedings against the employer.
The High Court ruled in favour of the employer, holding on the evidence that the sales rep had participated actively in the operation of his daughter's business, that there was identity between the services provided by the two businesses and that the sales rep had tried to solicit business for his daughter's business from the employer's customers. The sales rep's breach of his duty of loyalty in so doing constituted gross breach of contract and the employer was therefore entitled to summarily dismiss him.
Norrbom Vinding notes
- that the judgment illustrates that it is contrary to the duty of loyalty for employees to engage in activities in competition with their employer and that this may justify summary dismissal by the employer.