Romero Insurance Brokers Ltd v Templeton & Anor

A constructive dismissal requires conduct which, viewed objectively and in context, clearly shows an intention to abandon and altogether refuse performance of the employment contract. Temporary restrictions on attendance and client contact may be justified by unusual circumstances and will not necessarily amount to repudiation.

A post-termination covenant is enforceable where it protects a legitimate trade connection and goes no further than reasonably necessary. In insurance broking, the annual renewal cycle may support a 12-month non-solicitation period, although a longer period may be excessive. Where the covenant is enforceable and breached, injunctive relief will normally be appropriate.

The claimant employed the first defendant as a corporate manager and sought relief after he resigned and joined a competitor. It alleged that the claimant’s conduct amounted to constructive dismissal, that confidential documents had been removed and used, and that the defendant had breached a 12-month non-solicitation covenant.

The court rejected the constructive-dismissal case and found that removal or misuse of confidential documents had not been established. The central remaining issue was whether the covenant was supported by consideration, enforceable as a restraint of trade and sufficiently established to justify an injunction.

1. Constructive dismissal. The proposed redundancy consultation was genuine and had not been predetermined. The employer’s instructions that the defendant should not attend the office or contact clients were justified by the particular circumstances, including his search for alternative employment and attempts to arrange a sale of his client book. The temporary arrangements for clients did not demonstrate an intention to abandon the contract. Applying the context-specific approach in Tullett Prebon Plc v BGC Brokers LP [2011] EWCA Civ 131 and the objective test stated in Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168, there was no repudiatory breach and no constructive dismissal. The reasoning in William Hill Organisation Ltd v Tucker [1999] ICR 291, concerning long-term exclusion from work, did not apply to this situation.
2. Other alleged breaches. The defendant had not proved that he removed or misused documents containing confidential information. The employment contract incorporated the bonus arrangement, but it entitled him to a bonus only if the first year was measured from the commencement of employment. In any event, no refusal to pay had occurred before his resignation.
3. Restrictive covenant. The covenants formed part of the employment package and were supported by consideration. The claimant had to establish a legitimate protectable interest and show that the restraint was reasonable in the interests of the parties and the public. The relevant interest was the claimant’s trade connection with clients with whom the defendant had dealt. The covenant was limited to such clients and prevented solicitation for 12 months after termination.
4. The 12-month period was reasonable. The defendant had substantial client connections, and the period allowed time for the claimant to establish relationships between clients and replacements and for the defendant’s personal influence to diminish. The annual renewal cycle of insurance policies was relevant, consistently with the consideration of renewal periods in Lonmar Global Risks Ltd v West [2010] EWHC 2878 (QB). A longer period would not have been upheld. The approach in Stenhouse Australia Ltd v Phillips [1974] AC 391 was applied.
5. The covenant was enforceable. An injunction was appropriate for the remainder of the 12-month period, subject to submissions concerning the evidence identifying clients within the six-month contractual period. The claimant was entitled to damages for breaches occurring between the defendant’s departure and judgment, with quantum to be assessed subsequently at the claimant’s expense.