UK
Following his recent op-ed in the New York Times, Greg Smith has won praise for speaking out against some of the more unsavoury practices at Goldman Sachs. His letter to his former employer has gone viral and the press are having a field day. Other employees who have similar gripes will doubtless be inspired, but beware: there are legal consequences to bad mouthing your employer.
Different rules will apply depending upon whether you’re still employed at the time of the bad mouthing. If you are still in employment, you will be bound by the implied term in your contract of employment of mutual trust and confidence that underpins every employment relationship, together with a similar implied term not to bring your employer into disrepute. You will also be bound be policies that are likely to be in place to stop you blogging adversely about your employer on social networking sites, whether in our out of office hours. Any breach of such terms or policies may give rise to disciplinary proceedings against you; in extreme cases it can amount to gross misconduct.
Employment tribunals are starting to get to grips with the use of social media sites, and in the past few months have upheld a number of dismissals against employees for gross misconduct relating to blogging about work. An employee of Apple was recently dismissed for saying some particularly negative things about the company’s products on Facebook. Apple had a very clear social medial policy prohibiting employees from making critical comments about its brand on social media sites, which undoubtedly helped the company win the tribunal case.
If you bad-mouth your employer after you’ve ceased employment, the law will view you differently. Greg Smith had already resigned from Goldman Sachs before he sent his missive. If you have already left employment, you will no longer be bound in the same way as you were while employed. But there are still traps for the unwary. You may have signed a compromise agreement (expected to be renamed “settlement agreement” from April 2012) and there will invariably be a clause in the agreement preventing you from making disparaging comments about your employer after you have left. Any such breach here can land you with a claim for damages.
You will also continue to be bound by the confidentiality clauses in your contract of employment, which usually govern disclosing such matters as details of clients, investors, funds strategies.
So how did Greg Smith get away with it? First of all he resigned and therefore would not have signed a compromise agreement. He also used his letter to dwell upon personal experiences of working at Goldman Sachs and personal thoughts. There was no disclosure of confidential business secrets, and breaches of trust and confidence as an employee were no longer an issue. He carefully navigated around what could otherwise have been a tricky position.
If you’re tempted to follow suit, tread carefully. Don’t forget the practical considerations: any other bank is unlikely to hire you. And what about your reference? I cannot see Goldma referring to Greg Smith favourably.
Philip Landau is an employment lawyer at Landau Zeffertt Weir solicitors and offers users of eFinancialCareers a free initial consultation.
Two things: First, employers can invoke the ‘implied term not to bring your employer into disrepute’. What about your employer bringing your reputation into disrepute by its practices? Whistleblower defence, surely?
Second, ‘Settlement Agreement vs Compromise Agreement’. Semantic haggle. Compromise agreement equals they pay you to keep schtum about where the bodies are buried for a derisory sum (for some) and they can carry on their disreputable practices, all nodded at by the muppets (sorry, no offence to Goldman clients) in our judiciary.
Settlement agreement just means they feel better about doing the dirty because they gave it a nice, shiny new name. You don’t achieve anything more, or get paid more, you don’t get anything other than a new name for an old con.
And don’t think for a second that Greg Smith did what he did without ironclad lawyering-up. He worked for Goldmans, didn’t he?