‘If employers are unhappy at work, or get a better offer of employment, they are likely to leave and join a competitor’ court hears in opening statement from one of the brokers who went to Ardonagh
The gloves came off in the Gallagher v Ardonagh staff poaching battle as the High Court was told, ”employees are human beings not chattels”.
The Arthur J Gallagher Group is accusing the Ardonagh Group of luring away one of its key broking teams in a revenge-driven bid to harm its business.
The legal war was sparked by the 2017 departure of Peter Burton and three senior colleagues from Gallagher subsidiary Alesco Risk Management.
But the Ardonagh Group, two of its subsidiaries, Burton and fellow top broker, Nawaf Hasan, insist the complaints against them are groundless.
They say the brokers were fully entitled to leave jobs they didn’t like and that Gallagher’s multi-million-pound damages bid is seriously overblown.
In her opening statement to the court, Jane McCafferty, for Burton, said: “Employees are human beings, not chattels.
“If they are unhappy at work, or get a better offer of employment – both of which happened in this case – they are likely to leave and join a competitor.”
Loss to employer
“The law does not prohibit this, it encourages it,” she told Justice Freedman.
Noting that “stifling competition is not a legitimate business interest”, she said that employee freedoms are jealously guarded by the law.
She added: “When valuable employees leave an employer and join a competitor it is likely to cause some loss to their former employer.
“This is particularly so in insurance broking, which is a personal business.
“But the fact that an employee causes loss does not, of itself, mean that the employee has behaved unlawfully, or that this is a recoverable loss.”
One of the reasons why Burton left Alesco was his concern about its “independence in the market” after it was taken over by the Gallagher Group in 2014.
And he was also unhappy after “detrimental changes to his contractual terms were imposed, or were attempted to be imposed, by Alesco,” claimed the barrister.
Burton’s services were in hot demand and, before leaving Alesco the barrister said, he had received offers, or interest, from nine alternative employers.
McCafferty told the court: “In these circumstances, Mr Burton was bound to leave Alesco’s employment in the summer of 2017.
“He was unhappy and had lucrative alternative offers” before finally leaving and joining Ardonagh subsidiary Bishopsgate.
“Burton’s decision to leave was to cause some loss to the claimants, but not recoverable loss. His decision to leave Alesco was a lawful one.”
The barrister told the court of the bitter response of Gallagher chief executive Simon Matson and other senior managers to the broker’s resignations.
‘Messing with the wrong boys’
“Their reactions were not ones of concern that their employees might be unhappy at work,” she claimed
“Nor were they sanguine reactions recognising that, in a competitive market, employees will come and go.
“Rather the reactions were to view all of those leaving as traitors and to rush to judgment that they must have behaved unlawfully.”
McCafferty said Matson had complained to colleagues after the departures that he felt as though he had suffered “a terrorist attack”.
She alleged that Matson said on another occasion: “They are going to be crushed… they are messing with the wrong boys.”
The barrister added: “It is this rush to judgment – this assumption that anyone who left Alesco must have acted unlawfully and in any event deserves to be attacked because they have picked the wrong team – which pervades this action.
“It is why Mr Burton faces an allegation that he was engaged in the alleged conspiracy when even a cursory review of the evidence demonstrates that that is not so.”
Dismissing claims that Burton and Hasan had “conspired” to injure Gallagher’s business, Miss McCafferty said they worked in different teams and had “no working relationship”. Both were unhappy at Alesco and both had their own independent reasons for leaving.
It was, she added, “striking” that Gallagher had not produced any evidence from members of Burton’s former team that he “encouraged them or colluded with them to leave Alesco and join Bishopsgate”.
The barrister said that about 90% of the damages Gallagher and Alesco are claiming relate to salary increases and retention payments made to other employees to keep them from straying after the brokers’ resignations.
Not a conspiracy
More than £8m was being claimed in respect of retention awards alone, she told the judge.
But she added: “These additional costs flow, not from a conspiracy, but at most from the decision of Burton – and other employees who left the claimants’ total workforce of around 20,000 and Alesco’s energy group of over 60 staff – to leave Alesco and commence employment with the corporate defendants.”
The case centres on the departure of Burton, Hasan, James Brewin and Gerard Maginn from Alesco within months of each other in summer 2017. They joined either Bishopsgate or Price Forbes, both Ardonagh subsidiaries.
Gavin Mansfield QC, for Gallagher, has claimed that the spate of resignations “was the product of a carefully planned conspiracy” between Ardonagh, Hasan and Burton.
“It involved unlawful means, namely breaches by the departing employees of their contractual duties, their equitable duties of confidence and, in the case of Mr Hasan and Mr Burton, their fiduciary duties. Those breaches were colluded in, and encouraged by, the corporate defendants,” he told the judge.
All the allegations are denied. The High Court hearing continues.
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