Square Global Ltd v Leonard

An employee claiming constructive dismissal must establish conduct which, objectively assessed, amounts to a repudiatory breach of the implied term of trust and confidence. A course of conduct may cumulatively amount to such a breach, but the final act must contribute to it. The court must also consider whether the employee resigned in response to the breach, although the significance of that question depends on the remedy sought.

In inter-dealer broking, legitimate interests may include customer connections and confidential, portable market information. A six-month non-compete covenant may be reasonable where non-solicitation and confidentiality protections are difficult to police. The court retains a discretion whether to grant an injunction, considering the circumstances at trial.

Square Global Limited employed Julien Leonard as an inter-dealer broker under a contract requiring six months’ notice and containing post-termination restrictions. Mr Leonard resigned summarily on 11 November 2019, alleging constructive dismissal based on bullying, unfair remuneration allocation, mishandled grievances, regulatory concerns and insecure employee data.

Square sought declarations that the employment continued until 11 May 2020, restrictions on competing employment during the notice period, and enforcement of post-termination covenants. The central issues were whether Square had repudiated the employment contract, whether Mr Leonard had breached the job-notification clause, and whether the non-compete and non-dealing restrictions were enforceable.

1. Constructive dismissal. The claim failed. Square had not shown an intention to abandon and altogether refuse to perform the employment contract. The alleged acts, whether considered individually or cumulatively, did not breach the implied term of trust and confidence. The applicable standard was objective and exacting, requiring conduct which clearly destroyed or seriously damaged the relationship of trust and confidence without reasonable and proper cause.
2. The court applied the approach in Kaur v Leeds Teaching Hospitals NHS Trust, including consideration of the latest act, affirmation, repudiatory breach, cumulative conduct and whether the employee resigned in response. The October 2019 exchanges were informal and, viewed in context, did not constitute a repudiatory breach or a refusal to deal with grievances. The alleged regulatory misconduct and accessible pay document were not proved. Even assuming isolated unauthorised trading, the conduct would not necessarily show that the business as a whole was run dishonestly or would not, on these facts, sufficiently impinge on the employment relationship.
3. The court accepted that earlier repudiatory conduct could in principle be revived by later conduct despite affirmation. However, the earlier bullying by Mr Scemama had been addressed decisively, and the allegations of unfair remuneration and grievance-handling were not established. Mr Leonard’s continued employment and later contractual commitment would in any event have amounted to affirmation.
4. Square was entitled to affirm the contract. Mr Leonard remained employed until 11 May 2020 and was prohibited from working for a third party during that period. His counterclaim for wrongful dismissal was dismissed.
5. The job-notification clause was not breached. The successive Market Securities drafts did not establish that a binding contract had been concluded before Mr Leonard’s resignation.
6. Post-termination restrictions. Applying the staged analysis in TFS Derivatives Ltd v Morgan, Square had legitimate interests in customer connections and confidential market information. The six-month non-compete was no wider than reasonably necessary. The period during which Mr Leonard had already been off the market after his summary resignation was not set off against the contractual restriction.
7. The non-compete was enforceable and injunctive relief was granted until 11 November 2020. The non-dealing restrictions were also found enforceable, although no further analysis was necessary.