Horkulak v Cantor Fitzgerald International (IDS Brief 743, October 2003)
This recent case is a timely reminder to employers that just because they pay employees lots of money, does not mean that they can treat them anyway they like.
Mr Horkulak was a senior city employee earning close to half a million pounds a year. He took a constructive dismissal claim in the High Court arguing that his employer had breached the implied contractual term of mutual trust and confidence, in that his em-ployer, Cantor Fitzgerald Inter-national had, without reasonable and proper cause, conducted itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between itself and the employee.
After Mr Horkulak's promotion to the position of senior managing director in August 1999 he was subjected to regular bullying. The Judge found that Mr Horkulak's manager dictated to employees, instead of having discussions with them. He regularly employed extreme foul language as part of his dictatorial style. He swore at Mr Horkulak and threatened him with the sack on a number of occasions. Finally, on the 28 June 2000, Mr Horkulak's manager told him over the telephone that he had prepared a bonus schedule incorrectly, and he was a "stupid motherfucker" and used other abusive expressions. It was in response to that final conversation that Mr Horkulak resigned. CFI tried to justify the language used on the basis that the words used, were "common currency between Mr Horkulak and his manager". It also tried to argue that the manager's conduct was acceptable, bearing in mind his frustration at the alleged repeated and serious shortcomings in Mr Horkulak's performance.
The Judge rejected such arguments, finding that the use of foul language was not incidental or meaningless, and that Mr Horkulak, though he had sometimes used foul language himself, was still entitled to proper treatment in accordance with his contract. He went on to find that whilst Mr Horkulak's manager was entitled to express disapproval of Mr Horkulak's performance, he should have done that through discussion, rather than threats couched in foul language. The manager was not entitled to "assert his authority by the use of foul and abusive language which gave no chance for the claimant to respond to any criticism".
The Judge therefore found that the manager's deliberate course of conduct had breached the term of mutual trust and confidence. The legitimate demands arising from what was a difficult and demanding work place had to be balanced by a system of fair enforcement. Mr Horkulak left work because his role and status as a senior manager and employee had been severely undermined.
Mr Horkulak was awarded £1m in damages. This related to the salary and bonuses which he would have received from the date of his dismissal to when his fixed term contract had been due to expire, less his earnings since dismissal. The Judge rejected CFI's argument that Mr Horkulak should have mitigated his loss by finding alternative employment earlier than he did. He found that the re-lapse which Mr Horkulak suffered at the beginning of 2001, in relation to alcohol and cocaine abuse would have been unlikely to have occurred if CFI had acknowledged the wrong it had done and accepted liability for his constructive dismissal. In those circumstances it was not open to CFI to argue that he had failed to mitigate his loss.
Whilst this case involved a highly paid employee, the finding that regular use of foul language does not necessarily remove it's power to offend, applies to any group of employees. Further, it is a clear indication that if employers have concerns about the performance of an individual, they should raise those concerns in a proper and constructive manner, rather than trying to force a change through the use of foul language and threats of dismissal.
The short shrift given to the employer's arguments on mitigation can also be relied on in dismissal cases in the Employment Tribunal.