An employee in an employment relationship is subject to a duty of loyalty towards his employer, which, inter alia, implies that the employee is prohibited from carrying on competing business against the employer. This case related to whether an employee had breached his duty of loyalty to the effect that the employer was entitled to summarily dismiss the employee.

Without the employer's knowledge and consent, the employee had performed work for one of the company's customers. The work was invoiced through the employee's own company, but the employee had used the company's premises, machines and tools to carry out the work.

The fact that the staff manual authorised "moonlighting and spare time work" outside normal working hours in connection with the loan of premises and tools could not be regarded as permission to use the premises for carrying on competing business.

The employee pointed to the fact that he had merely executed an order from a customer which the employer had previously refused. However, the arbitrator did not find that it had been proven that the employer should have refused any order or enquiry from the customer.

Moreover, the arbitrator stated that the employee ought to have been aware that he was not entitled to carry out work in his own name for the company's customers without the company's consent.

Consequently, the arbitrator found that the employee had disregarded his duty of loyalty by having carried on competing business against the employer without the company's knowledge or consent. As such, the summary dismissal was justified, and the employer was exonerated from the claim for payment of compensation and salary during the notice period.

The decision is in line with previous case law and as such confirms that carrying on of competing business against the employer is contrary to the duty of loyalty.