Horkulak v Cantor Fitzgerald International

An employer’s right to impose demanding performance standards does not permit treatment which objectively destroys or seriously damages the relationship of trust and confidence. Constructive dismissal may arise from a cumulative course of conduct, including a final incident which is not itself a breach, where the conduct is sufficiently serious and the employee leaves in response. High remuneration and a workplace where abusive language is common do not justify a lower standard of treatment. Criticism must be proportionate and handled fairly, particularly where contractual disciplinary procedures require discussion and advice. A contractual discretionary bonus must be assessed reasonably and in good faith.

The claimant, a senior managing director employed under a fixed-term contract, left his employment after a period of alleged intimidation, abusive criticism, threats of dismissal and refusal to engage with concerns about his performance. He claimed constructive dismissal, damages for lost remuneration and discretionary bonuses, and resisted the employer’s counterclaim for repayment of an earlier payment.

The central issues were whether the employer’s conduct breached the implied term of trust and confidence, whether the claimant had failed to mitigate his loss, how contractual discretionary bonuses should be assessed, and whether the employer could rely on a prospective summary dismissal.

1. Claim succeeded. The claimant’s departure amounted to constructive dismissal. The employer’s deliberate course of conduct from January to 28 June 2000 breached the implied term of trust and confidence.
2. The applicable test was objective. The question was whether the employer, without reasonable and proper cause, conducted itself in a manner calculated or likely seriously to damage the relationship of trust and confidence. A single act or a cumulative series of acts could constitute a repudiatory breach. The final act need not itself be a contractual breach.
3. The employer was entitled to require high standards and to contact the claimant outside normal hours. Those rights were subject to fair and proportionate enforcement. Threats of dismissal, intemperate and abusive language, refusal to permit rational discussion, and insistence on standards which the employer believed the claimant could not attain were incompatible with the implied term.
4. The claimant’s senior status, substantial remuneration, and the prevalence of foul language in the workplace did not remove his entitlement to proper contractual treatment. The contractual disciplinary procedure required discussion and advice, and avoiding formal disciplinary processes did not justify abandoning those standards.
5. The employer’s motive was irrelevant. The conduct objectively undermined the claimant’s role and authority, left him no realistic opportunity to restore trust, and made his position intolerable. The claimant left in response to that breach.
6. The discretionary bonus clause required the employer to exercise its discretion reasonably and in good faith. The court assessed remuneration at £520,000 for 2000 and £700,000 for 2001. The claimant’s relapse did not amount to a failure to mitigate because it formed part of the continuing consequences of the employer’s breach, aggravated by the employer’s refusal to acknowledge liability.
7. Judgment was entered for the claimant for £912,000, subject to tax issues. The counterclaim for repayment of £100,000 failed.

First-instance judgment. No prior appellate decision is stated in the judgment.