INTRODUCTION
The Employment Contract remains to be the
substantive document containing the various duties and obligations an employee
may have towards his/ her employer. This is due to the varying nature of each
kind of employment. However, basic mandatory duties that cut across all forms
of employment originally from the common law have been established. These are
now incorporated into legislations such as the Kenyan Employment Act as will be
discussed in this paper.
The first section will deal with the individual
duties of an employee, giving due regard to relevant statutes, international
standards and case law. The second section will analyze the interaction between
the duty of fidelity and restraint of trade.
1.
Duty
to Work with Reasonable Care and Skill
This duty can be traced back to an early case in the
United Kingdom Hammer v. Cornelius[1]
where it was stated that it can amount to a breach of implied duty when an
employee fails to work with reasonable care and skill. It is an implied duty at
Common Law. It may be inferred from the following instances:
·
The employer can recover from an
employee who due to failure to exercise reasonable care and skill causes him
loss.
In the case of Janeta
Bank v. Ahmed,[2]
the employer sued to recover from a bank manager who had issued bad credit
amounting to 34,640 pounds. The court ruled that the bank manager had failed to
exercise reasonable skill and care.
·
The employee is also tasked under this
duty to take reasonable care of the employer’s property.[3]
Failure to take care of the employer’s property can
warrant a dismissal. In Superlux v.
Plaistead[4]
the employee was tasked to take care of the employers van together with the
property inside. He acted negligently and as a result the property was stolen.
It was held that his dismissal was justified since he had failed to work with
reasonable skill and care.
·
This duty exists also where an employee
mandated to ensure safety of other employees.[5]
Failure to heed this duty due to negligence gives
the employer the right to sue the employee for damages. In Lister v. Romford ice[6] an employee was sued by the employer to
recover damages. The employee had injured a fellow co-worker who sued the
employer and was awarded damages. The employer’s insurance company sued according
to the principle of subrogation. The court held that the employee was to
indemnify the employer for the breach of his contractual duty.
The International Labor Organization has come up
with some conventions to cater for this duty. The Convention on the Safety and
Health in construction which caters for construction activities such as
building, erection and dismantling of buildings and civil engineering provides
for this duty.[7]
It provides that each worker is under a duty to work with reasonable care not
to cause harm or injury to fellow workers. However Kenya has not ratified this
convention yet.[8]
Under the Kenyan Law, the Occupational Health and
Safety Act[9]
makes provision for this duty. An employee is under a duty to cooperate with
the employer at all times and also take reasonable measures to ensure safety of
those who work with them in discharging their duties.[10]
Section 34(4) of the Employment Act provides that an employee is not eligible
for medical treatment by the employer if injury or illness is self-inflicted.
This means that the employee has a duty to take reasonable care of his health
and safety too in the work place.
2.
Duty to Obey
The duty
to obey is a fundamental duty of employment. It is the consideration given to
the employer by the employee in the employment contract a breach of which will
lead to a repudiation of the contract. The order by the employer is mostly
contained in the contractual agreement between the employer and the employee to
which the employee agrees upon signing the agreement.
The
employee is required to obey reasonable and lawful commands of the employer. The
modern statement for the duty to obey was made in 1959 by Lord Evershed in his
judgment in Laws v. London Chronicle[11] where he stated, ‘Willful disobedience of a lawful and reasonable order shows a
disregard, of a condition essential to the contract of service, namely, the
condition that the servant must obey proper orders of the master, and that
unless he does so, the relationship is, so to speak, struck at fundamentality.’
The
Reasonability of the Orders
Orders
that are reasonable have to be obeyed. Unreasonable orders need not be
obeyed. To determine the reasonability of an order, principles of good
human relations may be taken into account. It should also be determined whether
the contract is within the employee’s contractual obligation. In as much as the
orders are to be contained in the contract, the court also requires the
employee to be flexible and to obey orders incidental to his job. This was the
basis of the decision in Sim. V.
Rotherham Metropolitan Borough Council[12]. It includes such orders as those
involving new methods of performing a job.
Some
employers have taken care of this by introducing flexibility clauses in the
employment contracts. The courts however have limited the application of these
clauses in that they have to refer back to the employee’s main job and duties.[13]
Reasonable orders also include those not provided for in the contract as was
the case in Horrigan .v. Lewisham London
Borough Council[14]. Mobility is also among the areas that
require flexibility of the employee only if it is reasonable[15].The
exception to this will be when the duty in question endangers the life of the
employee as was decided in Ottoman Bank
Ltd v Chakarian[16].
Lawfulness of the Orders
Obedience
is required only for a lawful order; if it is not lawful, he need not obey it.
An employee can refuse to obey an illegal order as was seen in the case of Morrish V. Henlys (Folkestone) Ltd[17] whereby the employee was dismissed on
grounds of refusal to obey orders to falsify the account books at the garage
where he worked. It was held that the dismissal was unfair and that he was not
in breach of contract by refusing to comply with the order.
However, not all acts of disobedience entitle
the employer to summarily dismiss the employee as was held in re Barrett & Women’s Hospital, Crown
Street, Sydney[18].
It was found that ‘… not every act of disobedience will allow an employer to
summarily dismiss an employee. Some acts or omissions may be trivial or
inadvertent and without any element of willfulness or carelessness and regard
may be had to the results. A calculated and persistent course of disobedience
is never trivial and is necessarily willful.’
In the Kenyan law, gross misconduct of the employee
is a ground for summary dismissal. Section 44 (4) of the Employment Act enlists
disobedience of the proper command of an employee as one of the components of
gross misconduct. The disobedience includes failure to obey orders of a person
placed on authority apart from the employer. This however is subject to the
procedure threshold provided for in section 41 of the Act that requires the
employer to explain to the employee the reasons for termination as was the case
in Johnstone Mwaizinga .v. Delmas
Security Services[19].
This has been
illustrated in most cases in the Kenyan courts. In Konig v Kanjee Naranjee Properties
Limited[20], Law JA noted that, ‘a master is
entitled to dismiss his servant summarily for willful disobedience of his
master’s lawful and reasonable orders, which is his duty to obey.’ This was the
basis for the decision of other cases such as in Karimi
v KCB & Another[21]and in Njeru v
Agip (K) Ltd[22]
.
This duty
is also referred to as the duty to cooperate. It connotes a fulfillment of any
obligations that the employee has towards the employer subject to their
legality and reasonability as discussed above. The duty to
cooperate will usually find its expression in the contract of employment or the
disciplinary rules and will usually be made known to the employees when they
start to work.
3.
Duty
to act in Good Faith/ Duty of Fidelity
The duty to act in good faith is wide and entails
the loyalty and fidelity of the employee. It relates to issues of
confidentiality and non-compete clauses. An employee has a duty not to disclose
information to rivals of the employer and should not establish or be part of a
competing undertaking as that of the employer. It also requires the employee to have regard to the
interests of the employer. In addition, even if
the employee is not competing with the employer, having outside employment or
business interests may breach the implied duty of fidelity.
The duty of fidelity
can therefore be considered to mean that employees must not be in a conflict of
interest with their employer. Employees may be considered to be in a conflict
of interest position if:
i) The employee is competing with the employer.
ii) The employee is not in direct competition
with the employer but has a side business and the commitment to this business interferes with
the duty to the employer.
iii) The employee uses the employer’s resources to
advance his or her own interests.
The duty
of fidelity must however not be confused with the fiduciary duty. The latter
requires more extensive duties from the employee. A fiduciary is required to act solely in
the interests of his employer to the exclusion of his own interests. For
example a director of a company will owe a fiduciary duty, as may senior
employees. Certain activities of an employee may also give rise to a fiduciary
duty, for example in Nottingham University v Fishel [23]the
employee did not owe a general fiduciary duty except in relation to one area of
work outside of the university for which he was employed. The duty of fidelity
does not require the employee to always act in the interests of his employer to
the exclusion of his interests. This duty has been analyzed to mean the
following components:
Ø Duty not to compete with the
employer.
This affects employees who start a business with the
intent of competing with his/her employer. In Adamson v. B & L Cleaning Services Ltd[24]
an employee asked a customer to be put on a tendering list for a contract on
which they were working when it was due for renewal. The tribunal held that
these actions amounted to a breach of duty of fidelity.
Making secret profits is another form of breach as
it could lead to loss of trust and confidence of the employer. Hence, in such
instances, summary dismissal could be justified. In Neary and Neary v. Dean of Westminster[25],
the claimants were dismissed for using their positions in their organizations
to make secret profits. This conduct was held to undermine the relationship of
trust between the parties.
Ø Duty not to disclose confidential
information[26].
The following elements are taken into account in
considering whether an individual breached this duty;
·
The nature of employment-if it
habitually requires confidentiality, then a higher standard of confidentiality
is required.
·
Nature of the information itself-this
refers to the information that can only be regarded as ‘trade secrets’ rather
than concentrating on the ‘status’ of such information.
·
Steps that the employer had taken to
inform the employee about the confidentiality. This is done so by limiting the
employee from disclosing certain information. Another instance is where the
employee is able to differentiate the information worth disclosing and
confiding the other part of the information.
In case of any breach, the employer can issue any
form of punishment against the employee who has disclosed the information. In Camelot v.Centaur Publications Ltd[27],
a copy of the draft accounts of the company had been sent by unknown employee
to an interested journalist. The information revealed the remuneration of some
of the company’s directors. The company asked the court for the retrieval of
the leaked information so as to find out the employee who leaked it. The court
accepted the request and stated that it was in the public interest of the
employer to know his disloyal employee.
Having discussed the duties above substantively, the
following section will now turn on the interaction between the duty of fidelity
or good faith and the issue of restraint of trade on the employee in employment
relationships.
Restraint Of Trade and its interaction with the
duty of fidelity
A
contract in restraint of trade can be defined as one in which a party ,the
employer, agrees with any other party, the employee, to restrict his liberty in
the future to carry on trade with other persons not parties to the contract in
such a manner as he chooses [28].
A restraint of trade clause is commonly
included in an employment contract to enable an employer to protect his
business from competition from ex-employees. In terms of a restraint of trade
agreement, an employee is prevented from starting his own business in
competition with his employer, or working for competitors for a specified
period in a specified geographical area after termination of his employment
contract. At the outset it must be noted that restraint of trade arguments are
not governed by hard and fast rules and are not regulated by labor law, but by
the law of contract.
A
restraint can prevent:
Ø An employee from ceasing employment and
immediately moving to work for a competitor of his or her former employer.
Ø A former employee soliciting work from the
customers or clients of the former employer for the employee’s new employer.
Ø A former employee from soliciting his or her
former colleagues to leave the former employer and join the employee at his or
her new employer.
The Court will not enforce a restraint of trade
clause made by an employer merely to protect the employer from competition by a
former employee. To be enforceable there must be some legitimate proprietary or
business interest which an employer is seeking to protect. This means that in each
case the restraint of trade provision must be limited in terms of its length
and its geographical scope. The extent of the limitation is important because
enforcement of a restraint of trade provision may leave an employee without
income for the period of the restraint. This is both a factor that may make a
challenge to a non-competition restraint by an employee more likely and
something that, in practice, will weigh with the courts when deciding whether a
restraint is unreasonably long[29].
The interaction
The law regulates the obligations of employees
in relation to knowledge and information differently during and
post-employment. During the term of employment, the contractual requirement of
fidelity or good faith determines the proper use of all information whether
confidential or not, by most employees. Some executive or professional
employees may be held to the higher standards of a fiduciary. The position
after termination of the employment contract such as when an employee has
chosen to move to a new organization stipulates that only an equitable
obligation of confidence in relation to genuine trade secrets remains. The
broader duty of fidelity or good faith is no longer relevant[30].
Therefore, after termination employees are free
to do as they like with any acquired stock of knowledge that does not meet the
legal standard of a trade secret. Except for trade secrets and proprietary
intellectual property, they are free to draw on everything that they have
previously learned, to advance themselves or some other organization. The
difficult task the law has to perform is to craft a test to distinguish between
this type of free knowledge, and a firm’s real and valuable trade secrets[31].
However there are different opinions on the
importance of restraint of trade overriding the duty of fidelity in an
employment relationship. This depends on the following:
v Whether
the restraint is reasonable.
v Whether
the restraint has a legitimate purpose.
In the case of Faccenda Chicken Ltd v Fowler[32]
the distinction between
information containing trade secrets and information of general knowledge were
discussed in order to determine which information may call for restraint of
trade. The distinction indicated
that “the first always ‘belongs’ to the employer, but once the employment
contract is terminated the employee can draw on the latter, free from
restraint. Genuine trade secrets are thus governed by equitable obligations
post-termination; but an employer can also choose to ‘protect’ them by express
contractual provisions such as confidentiality clauses and general restraints
of trade”.
a) Whether the restraint is reasonable.
The law is averse to such general restraints on
the normal operation of markets and therefore the default principle is that
anti-competition clauses or general restraints of trade are contrary to public
policy and void[33].This
has been affirmed by Lord Mcnaghten in the case of Nordenfelt v Maxim Nordenfelt Guns &Ammunition Co Ltd[34] where he stated that,”
the public have an interest in every persons’ carrying on his trade freely…”. Restraint of trade not only prevents an
employee from competing with an ex-employer but also with other competitors.
This therefore suggests that the law relating to trade secrets and
know-how does not impose significant constraints on individual inventive or
creative workers’ freedom to migrate to another organization of their choice.
The employee can integrate in a new organization and safely draw on all
accumulated knowledge and know-how as long as this does not constitute a
deliberately acquired or accumulated trade secret in documentary form.
There is an exception
to this prohibition. Some restraints are enforceable if they are
reasonable because they are limited in scope and serve a legitimate purpose.
This is the other limb of the Nordenfelt case where Lord Mcnaghten
stated that reasonableness of a covenant entails, “…in reference to the
interests of the public, so framed and so guarded as to afford adequate
protection to the party in whose favor it is imposed, while at the same time it
is in no way injurious to the public”. The onus of proving reasonableness
is on the party seeking to enforce the covenant.
b) Whether the restraint has a legitimate purpose.
Legitimate purpose lies at the heart of the
reasonableness exception; only once such a purpose is established do issues of
the nature of excluded business, term and geographical reach of a restraint
come into play. Thus, employers cannot rely on ambit assertions that all
businesses have secrets worth protecting to justify restraining post-term
competition: they will have to establish that in their particular business
there are such secrets to protect and exactly what they are[35]
as was affirmed in the case of Littlewoods
Organization Ltd v Harris[36]
by Megaw J.
Therefore, in as
much as an employer may seek to have a restraint of trade on a contract of
employment it is not absolute that it will be enforced in a court of law.
Several options have to be weighed in considering if there is breach of the
duty of fidelity or not.
Conclusion
The duties of an
employee are substantively the duty to act of fidelity, the duty to obey or
cooperate and the duty to exercise care and reasonable skill in his work. It is
notable that the International Labor Organization’s conventions barely address
the duties of the employee as much focus is placed on the employer who
possesses a higher bargaining power. Common law thus remains to be very
instrumental as a source establishing these duties.
References
1. Recent
judicial guidance on restraint of trade provisions www.ktc.co.nz/.../Recent%20judicial%20guidance%20on%20restraint%2
(accessed 25 March 2015)
2.
Caenegem W ‘The mobility of creative
individual’s trade secrets’ https://elaw.murdoch.edu.au/.../Elaw-mobility-creative-individual.pdf (accessed 25 March 2015)
3.
Basson AC & Strydom EML 2005 ‘Restraint of trade; Essential Labour Law’ 4th edn
4.
1.Hardy, S. T. (2011). Labour law in Great Britain.
Alphen aan den Rijn, The Netherlands: Kluwer Law International.
5.
2.Lewis, D., Sargeant, M., & Chartered
Institute of Personnel and Development. (2002).Essentials of employment law.
London: Chartered Institute of Personnel and Development
6. http://www.trethowans.com/site/library/legalnews/duty_of_fidelity_and_fiduciary_duties(accessed
25 March 2015)
7. Employment
Act of 2007. Kenya Law Reports
8. The
Kenya Law Reports.
[1] (1958) 5 CBNS 236
[2] (1981) ICR 971
[3] Chris Turner Unlocking Employment Law (2013) 196
[4] (1958) The Times 12 December
1958
[6] (1957) AC 555
[7] Article 1 of The
Convention(C167) which entered into force in January 1991.
[8] Article 11, ILO Convention C167.
[9] CAP 15 of 2007.
[10] Section 13, the Occupational and
Safety Act 2007.
[11] [1959] 1 WLR 698 CA
[12] (1987) Ch 216
[13] Huden Ltd. V .Cowan (1982) IRLR)
314
[15] Courtlands Nothern Spinning
Ltd.v. Sibson (1988) IRLR 305
[16] (1930) AC 277
[17] (1973) IRCR 61
[18] (1947) AR (NSW) 565
[19] (2013) eKLR the court also noted
that the employer did not meet the requirements of section 45(2)( c) of the Act
that requires a fair procedure for summary dismissal.
[20] [1968]
EA 233
[24] (1995)IRLR 193
[25] (1999)1RLR 288
[26]n 4 above 71
[27] (1998)1RLR 80 CA
[28] Esso
Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 at page
317).
[29] Recent judicial guidance on
restraint of trade provisions www.ktc.co.nz/.../Recent%20judicial%20guidance%20on%20restraint%2 (accessed 25 March 2015)
[30] W Caenegem ‘The mobility of
creative individuals trade secrets’ https://elaw.murdoch.edu.au/.../Elaw-mobility-creative-individual.pdf
(accessed 25 March 2015)
[31] n 2 above
[32][1987] Ch 117
[33]As pointed out
by Williams JA in Cedar Hill Flowers & Foilage P/L v. Spierenburg [2002]
QCA 348
[34][1894] AC 535 at 565
[35]FSS Travel & Leisure Systems
Ltd v Johnson [1999] FSR 505 (CA)
[36](1977) 1 WLR 1472 at 1485
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