The ‘Allegation Trap’

Pete Doherty, Eminem, 50 Cent and Britney Spears…all names we are familiar with and not necessarily for their music. Like many “musicians” (and I use that term loosely), they insist on getting themselves into all sorts of trouble!

But it is not just the stars of the music industry that have been all over the news these past few weeks. An unusual case involving MSHK Limited (associated with Ministry of Sound) and an employee’s breach of contract on resignation, has recently brought to light the importance of making decisive action prior to bringing any allegations of gross misconduct against him.

These were the facts:

  1. May 2007 – Ben Cook accepts a position with a rival music company, Warner Music UK Ltd. and gives six months notice of resignation, a pre-requisite outlined in his employment contract. Although the contract prohibited Mr Cook from soliciting artists, clients etc. from the company on termination of his post, it did not contain a blanket non-competition clause.
  2. During the notice period, there is a heated debate between the company and Mr Cook. As a result Mr Cook is signed off with stress-related illness. During his time of absence, MSHK treats him with “sympathy and thoughtfulness” in order to prevent possible claims of constructive dismissal being brought against them.
  3. July 2007 – Mr Cook returns to work and is subsequently dismissed for gross misconduct in August 2007; MSHK claims that Mr Cook’s conduct had breached the duty of trust and confidence between the company and the employee, in two respects:

3.1 Mr Cook had attempted to deliberately mislead MSHK, maintaining that his new employment was not competitive.

3.2 Mr Cook had attempted to secure a substantial company loan after giving his notice, putting his personal interests ahead of those of MSHK.

In this case it was MSHK who issued court proceedings and took legal action, seeking a declaration that Mr Cook’s dismissal was lawful.

The Court of Appeal’s main concern was in identifying whether or not MSHK had affirmed the contract of employment following the alleged breaches of Mr Cook, on their attempt to “smooth things over” during his period of sickness.

The Court ruled in favour of Mr Cook in relation to the first ground of dismissal, stating that MSHK had given no indication, for a significant period of time, of their intention to bring disciplinary proceedings against Mr Cook.

However, in relation to the second ground for dismissal, the Court ruled that MSHK were entitled to pursue this allegation through the disciplinary process; MSHK had reserved its position and had documented evidence that it had written to Mr Cook, expressing its concern over the loan. The case of Cook v MSHK (2009) serves as a warning to all employers.

In making allegations of gross misconduct – or otherwise – act promptly, take decisive action and do not operate in a manner whereby you are being clearly inconsistent with an employee who has (allegedly) committed a breach of the employment contract.

In situations where an employee’s absence may obstruct a prompt pursuit of an allegation, clearly state that you, as a company, are reserving your position to proceed when the employee returns. Please note our Christmas opening hours.

We will be closed from 1pm on Christmas Eve and open again for business at 9am on Monday 4th January 2010. With our very best wishes for the season of goodwill,

By: Darry Khajehpour

For more information on how to deal with allegations of gross misconduct give us a call.

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