Milanese v Leyton Orient Football Club Ltd (Rev 1)

Summary dismissal under a contractual gross-misconduct clause requires misconduct sufficiently serious to justify immediate dismissal when assessed objectively and in context. Dishonesty, regulatory breaches, commercial errors and breaches of contractual duties do not automatically meet that threshold. The court must consider the employment, the contract, the alleged breach and the circumstances as a whole. An employment relationship is not ordinarily fiduciary merely because the employee holds a senior or trusted position. Fiduciary duties arise only where particular contractual obligations place the employee in a position requiring sole pursuit of the employer’s interests, and their scope remains confined by the contract.

The claimant was employed as the defendant football club’s Director of Football under a one-year Service Agreement. The club dismissed him summarily, alleging serious misconduct concerning player transfers, an outside company, the handling of a 14-year-old academy player, agent payments and overspending.

The claimant claimed the contractual termination payment, alternatively damages for wrongful dismissal, together with salary, expenses and holiday pay. The defendant counterclaimed repayment and other sums, alleging breaches of fiduciary duty. The central issues were whether the claimant’s conduct amounted to gross misconduct under the Service Agreement and whether his employment gave rise to additional fiduciary obligations.

1. Gross misconduct. Clause 10.1 was to be construed objectively. Summary dismissal required conduct which it was reasonable for the employer to regard as so serious as to justify instant dismissal. Conduct outside the listed examples had to be of a similar degree of seriousness. The threshold was deliberately high and had to be assessed in context, having regard to the employment, the contract and the particular breach.
2. The claimant’s conduct concerning the Lowry transfer, Henderson transfer, Liberty Italia, Dossena transfer and club spending did not satisfy that threshold. Errors in negotiating or documenting transfers, possible breaches of football regulations, involvement in an unauthorised outside business, overspending and associated dishonesty were insufficient in the circumstances. The court did not find that the relevant regulatory issues or payments amounted to gross misconduct.
3. The claimant’s conduct concerning the academy player was materially different. He participated with an unauthorised agent in a plan to secure the agent’s appointment, misrepresented the agent’s authority and pressured the child’s father to sign an oppressive five-year agreement. That conduct abused the claimant’s position as Director of Football and seriously breached the implied term of mutual trust and confidence. It constituted gross misconduct under the Service Agreement.
4. The defendant was therefore entitled to dismiss the claimant summarily. The claim for wrongful-dismissal damages failed. The claimant remained entitled to contractual payments and expenses accrued before dismissal, subject to the counterclaim.
5. Fiduciary duty. Applying the approach in University of Nottingham v Fishel [2000] ICR 1462, the court held that the claimant owed no fiduciary duties in addition to his express and implied contractual duties. His role and the wording of the Service Agreement did not place him in a position requiring him to act solely in the club’s interests. In any event, the remaining counterclaim heads were unsubstantiated.
6. The claim and counterclaim were dismissed.