Farnan v Sunderland Association Football Club Ltd

An employer may terminate an employment contract without notice where the contractual ground relied on is independently satisfied. A clause permitting termination for serious or repeated breach requires sufficient gravity in the individual breaches and, for repeated breaches, in their cumulative effect. Trivial breaches remain insufficient. The contractual grounds need not all be different formulations of gross misconduct.

Unauthorised retention or disclosure of confidential business information for personal purposes may amount to serious breach and gross misconduct, even where the employee anticipates litigation. A contractual bonus calculated by reference to a deal the employee “secures” requires the employee to be responsible for finding and concluding that deal. A discretionary bonus does not create a contractual entitlement after termination.

Michael Farnan claimed damages for wrongful dismissal and payment of an unpaid bonus from his former employer, Sunderland Association Football Club Ltd. The parties agreed that the issues were contractual, although parallel Employment Tribunal proceedings concerned the fairness and procedure of the dismissal.

The club relied on contractual provisions permitting termination without notice for gross misconduct, serious or repeated breach, failure to comply with serious directions, and serious breach of electronic communications rules. It alleged breaches involving confidential information, communications with third parties, media contact, outside interests and an offensive electronic card.

The central issues were whether Mr Farnan’s conduct justified summary dismissal under the Service Agreement and whether he was contractually entitled to bonuses relating to sponsorship arrangements.

1. Wrongful dismissal. The claim was dismissed. The relevant question was whether grounds for termination existed under clause 20 of the Service Agreement. The employee’s statutory and implied duties did not materially affect the contractual analysis.
2. “Serious” breach under clause 20.1.4 required consideration of all relevant circumstances, including the nature of the contract and term, the nature of the breach, and its actual or potential consequences. “Repeated” breach required gravity in the individual breaches and collectively. A trivial breach remained insufficient, even if repeated. A refusal to comply with a direction likewise required seriousness in both the direction and the refusal.
3. The alternatives in clause 20 stood independently. Conduct need not amount to gross misconduct if it constituted a serious breach under clause 20.1.4.
4. Mr Farnan had committed serious and repeated breaches by retaining confidential club information for private purposes, sending confidential material to prospective employers or business contacts, discussing confidential sponsorship information with a journalist without authorisation, and disclosing confidential Bidvest sponsorship information to Nissan South Africa. The breaches justified termination under clause 20.1.4 and, viewed cumulatively and by their common theme of breach of confidence, under clause 20.1.3.
5. The remaining allegations were either unproved, trivial, or insufficiently serious. Defects in the disciplinary process did not establish wrongful dismissal where the contractual right to terminate without notice existed.
6. Bonus. “Secures” in the 2011/12 bonus arrangement meant finding and concluding the shirt deal, with the employee being responsible for obtaining it. Mr Farnan had not secured the Tullow/Invest in Africa deal. He had therefore received all sums contractually due for that season. The Service Agreement contained no contractual entitlement to a subsequent shirt-deal bonus, and its discretionary bonus provisions excluded any claim for a 2012/13 bonus after termination.