Veitch Penny LLP - Exeter | Crediton, Devon

Case

Steven Horkulak v Cantor Fitzgerald International
High Court (31 July 2003)

Issues

(1) Constructive dismissal
(2) Breach of contract
(3) Implied term of trust and confidence

Facts

The Claimant was employed in January 1997, on a fixed term contract until September 2002. He was engaged in inter-dealing broking on the London market. He was promoted to senior managing director, working under Mr Lee Amaitis.

Horkulak made a claim for constructive dismissal on the basis that Amaitis’ behaviour had been a repudiatory breach of contract due to his behaviour. It undermined the Claimant’s authority to manage staff and as a result the implied mutual obligation of trust and confidence.

The breakdown in their relationship could be traced to late 1999. The Claimant referred to a number of incidents involving his boss. It was alleged that Amaitis called the Claimant at inappropriate times where he would swear and complain about work matters. The Claimant undertook a presentation, at which Amaitis demonstrated his contempt by shouting and swearing at him in front of a colleague and “storming” out of the room.

The Claimant alleged that the last straw took place on 28 June 2000. He received a call from Amaitis regarding a document the Claimant had prepared. Amaitis complained and rebuked the Claimant for missing out a set of brackets. Horkulak resigned and did not return.

The Defendant argued that the use of swear words was an accepted part of life within the company. It argued that the Claimant was unable to cope with the pressures that were properly part of his job and left for that reason. In making this claim, it referred to the Claimant’s medical history and that he had previously suffered work-related stress.

Decision

The claim was allowed.

The Court found that the Claimant was entitled to damages as a result of his constructive dismissal, in the sum of £912,000. This award reflected his loss of salary, guaranteed bonus and discretionary bonus from the date of his resignation until his contract was due to expire on 30 September 2002.

The Court noted that the conduct of the Claimant and Amaitis had to be considered in light of the nature of the job and the existence of a low threshold of tolerance for poor performance within the company. In line with the case of Cantor Fitzgerald International –v- Bird & Others [2002], a contract of employment could be undermined by the use of abusive language. Amaitis’ used offensive language as part of everyday communication. He often made threats of instant dismissal. It was noted that until the end of 1999, Amaitis had had no reason to find fault with the Claimant, and thereafter, any such issues the Defendant may have had with the Claimant were not properly dealt with. The behaviour of Amaitis was found to be a course of conduct from January to June 2000, and was found to have breached the implied term of trust and confidence in the Claimant.

Comments

The nature of the telephone call on 28 June 2000 was such that the Claimant was justified in not remaining in employment. During the conversation, he was given no opportunity to respond to the criticism, which in itself related to a minor issue. As a consequence, he was placed in fear of meeting with Amaitis and of being able to continue working under him. He left due to his role and status being undermined, and not as an act of insubordination.

As a result of the continual treatment he received, the Claimant’s position became intolerable and the relationship broke down. Amaitis repeatedly showed that he had lost faith in the Claimant, and had not allowed him any opportunity to re-establish that faith.

This decision reaffirms that threats of dismissal should never have been used to intimidate. Any rebuke on the part of an employer should be proportionate to the alleged failing, and in line with the employer’s grievance procedure. The frequent use of offensive language does not sanitise its effect. Whilst the Claimant may have also used such language, it did not mean that he was not entitled to proper treatment in accordance with his contract.