Tullett Prebon Plc & Ors v BGC Brokers LP & Ors

An employee may rely on objectively assessed conduct that seriously damages trust and confidence to justify termination, even if that conduct did not cause the resignation and was unknown when the employee left. A course of conduct may constitute a repudiatory breach, although the final act need not be serious in isolation.

A recruiting employer is liable for inducing breach of contract where it intentionally procures employees to leave despite being indifferent whether their departure is contractually justified. A desk head approached to recruit the desk must inform the employer and must not assist the recruitment.

Rival inter-dealer brokers disputed the recruitment of thirteen brokers and senior employees from Tullett by BGC. Tullett claimed conspiracy, inducing breach of contract and injunctive relief against BGC, its executives and certain employees. The recruited employees claimed that Tullett had constructively dismissed them. BGC counterclaimed that Tullett had induced three brokers to repudiate forward contracts with BGC.

The trial concerned liability and relief. The central issues were whether the employees had been constructively dismissed, whether BGC and its executives had induced breaches of the employees’ contracts with Tullett, whether the three brokers were entitled to terminate their BGC contracts, and the appropriate duration of any injunctions.

1. Constructive dismissal. The implied term of trust and confidence is assessed objectively. The conduct must seriously damage the relationship so that the employee should not be expected to continue working. A series of acts may be considered cumulatively, and the final act need not itself be repudiatory. An employee seeking only to justify termination, rather than claim dismissal damages, may rely on qualifying conduct whether or not it caused the decision to leave.
2. The meetings in which Tullett required the brokers to honour their contracts, threatened enforcement, and sought to persuade them to break their BGC contracts did not, in the circumstances, seriously damage trust and confidence. The employees’ constructive-dismissal claims therefore failed.
3. Desk heads. A desk head owes an implied duty of fidelity. When approached to recruit the desk, he must inform his employer and must not assist the rival’s recruitment. Providing information requested for that purpose or acting as a recruiting intermediary breaches that duty.
4. Inducing breach and conspiracy. BGC, Mr Lynn and Mr Verrier intentionally procured the brokers to leave Tullett regardless of whether they had valid constructive-dismissal claims. Their knowledge and indifference satisfied the mental element for inducing breach. Their agreement to use desk heads to assist recruitment and to call out the brokers established the relevant unlawful means conspiracy. Tullett’s claims succeeded.
5. BGC’s counterclaim. Tullett did induce the three brokers to repudiate their BGC contracts. However, BGC’s own conduct, including the planned mass walk-out, unlawful recruitment methods and divided legal representation, seriously damaged trust and confidence. The three brokers were entitled to terminate, so BGC suffered no loss and its counterclaim failed.
6. Relief and remuneration. Garden leave was enforced for twelve months for the relevant desks and eight months for Mr Yexley. The recruitment embargo against BGC continued for fourteen days after judgment. Contractual repayment provisions for signing, retention and loyalty payments were neither restraints of trade nor penalties.