Football coach sacked for seeking new role

20 June 2048

The coach of the Spanish football team was dismissed two days before their first World Cup match. Coach Julen Lopetegui had been negotiating with Real Madrid to become their new head coach. The Spanish Royal Football Federation was unaware.

To everyone's surprise, Real Madrid announced Lopetegui would come on board as their new coach after the World Cup. The federation president said Lopetegui only told them he had signed with Real Madrid five minutes before the announcement.

The Spanish Royal Football Federation dismissed Lopetegui within hours. There has been much speculation as to whether dismissing Lopetegui was wise or a knee-jerk reaction to the federation being embarrassed. Spain was one of the favourites to win the World Cup but that may be a more difficult task now their coach has been dismissed.

Federation president Luis Rubiales said they were compelled to act. "The federation cannot be left out of a negotiation by one of its workers and be informed five minutes before the press release."

Workers and employers must deal with each other in good faith, which includes being responsive and communicative.

Under good faith, workers should tell their employer anything that might affect their work or the employment relationship.

Certainly, if a worker is planning to leave, the employment relationship will not just be affected – it will end.

However, while good faith is important it is not an absolute rule and a degree of reasonableness must be applied. The Employment Court has confirmed workers are not required to disclose an intention to leave their employment, even when they plan to go into competition with their former employer.

What legal obligations do workers need to keep in mind when considering a new employment opportunity or setting up their own business?

Perhaps the most obvious one is confidentiality. The obligation to maintain the confidence of your employer's confidential information is one of the few employment obligations which continue after the employment relationship ends.

In a case involving Tag Oil, an employee, James Watchorn, downloaded a huge amount of information from his work computer, including highly valuable geotechnical information.

Police executed search warrants to locate the hard drive that Tag Oil's information was stored on. Watchorn had gone to work for a competitor, which no doubt was a source of considerable anxiety to Tag Oil. However he had not passed on the information before he was arrested.

Watchorn was convicted of the crime of accessing a computer system for dishonest purposes and sentenced to two-and-a-half years' imprisonment, although the conviction was overturned on appeal.

Tag Oil also brought an employment case and damages of $65,57 and penalties of $12,000 were awarded. An appeal was lodged and the matter was ultimately settled out of court.

Another important factor for workers to bear in mind is the duty of fidelity they owe to their employers.

In a famous case on fidelity, Mr Schilling worked for Kidd Garrett and had negotiated an agreement for his employer to sell Husqvarna products in New Zealand exclusively.

Although his employment agreement required one month's notice for termination, Schilling gave only two weeks' notice. He worked four days of those two weeks then went on leave, at which point he immediately began negotiating with Husqvarna to take the New Zealand agency.

The Court of Appeal stated that the employment relationship, and the duty of fidelity, continues until the end of the notice period. Schilling had breached the duty of fidelity by giving short notice, attempting to keep secret a visit to Sweden to see Husqvarna, and telling his employer lies about his intentions.

The duty of fidelity ends when the employment relationship does.

Once the notice period ends, a worker is perfectly entitled to compete for business connections and contracts, so long as there is no restraint of trade clause.

It is, of course, legal to sign a new employment agreement while still employed, but workers should not be so ambitious as to solicit their employer's business contacts until a later time. Had Schilling given proper notice and waited to negotiate, he would have been in the clear.

The duty of fidelity is wider than stealing your employer's supplier like Schilling did. It prevents the worker from engaging in any behaviour that is dishonest or harms the employer.

In the case of Rooney Earthmoving, the workers at fault really tested how many ways the duty of fidelity can be breached.

Three senior employees planned to set up a new company in competition with their employer, Rooney Earthmoving.

In addition, they planned to take a number of Rooney Earthmoving's other employees with them. While employed, they took preparatory steps, such as incorporating the company, arranging funding, and hiring of plant and equipment. The Employment Court found that this alone was not a breach of fidelity.

However, it was a breach for the first senior employee to solicit the other two senior employees to join him in establishing a company.

It was a further breach for them to then solicit other employees and customers of Rooney Earthmoving while still employed.

One of the three senior employees also removed important information from Rooney Earthmoving's files and took a client list and information about quotes.

They used the information to undercut Rooney Earthmoving's quotes and take their clients. Of course, these too were breaches of fidelity. The Employment Court ordered the former employees to pay over $4 million to Rooney Earthmoving.

Former Spanish football coach Lopetegui signing with Real Madrid pales in comparison to the underhanded behaviour exhibited by the employees of Rooney Earthmoving.

Real Madrid plays in an entirely different competition to the Spanish team. The two teams have the same captain and a number of the same players. Despite this, there could still be some real conflicts of interest were Lopetegui to coach both teams.

Some readers may agree with the decision to dismiss Lopetegui. However his dismissal, particularly the haste with which that decision was made, does not align with New Zealand's employment law principles.