Suspicions that your employees are using your confidential information and time that you have paid for to plot their next career move are sadly often justified. However, as a High Court case showed, specialist solicitors can help you protect your business from such unlawful conduct.
The case concerned a price reporting agency whose business development manager resigned and swiftly established a new venture in a similar field. The agency launched proceedings, accusing the man of, amongst other things, breaching restrictive covenants in his employment contract.
In upholding the agency’s claim, the Court noted that the man had very closely modelled his venture’s services and marketing material on those of his former employer. The two businesses provided price reports on similar products and were properly viewed as competitors.
There was ample evidence that, since his departure, the man had solicited or dealt with the agency’s clients in breach of covenant. The agency had a legitimate interest in protecting its confidential information, clients and other business connections and the duration of the covenants – nine months following the end of the man’s notice period – was no longer than was reasonably necessary.
The man had also breached his duty of fidelity in devoting an immense amount of his time, whilst still employed by the agency, to planning and obtaining investment in his venture. He had retained confidential documents belonging to the agency and had arranged meetings with its clients, promoting his services to them, prior to his resignation. His new business had thereby been able to hit the ground running.
The Court rejected the man’s plea that the company had breached his contract by examining his emails, including messages of a private nature, whilst he was on garden leave. The agency’s employee handbook conferred on it a right to access and inspect messages sent by employees on its internal IT systems. Even if the agency had breached the man’s privacy rights, that was not so serious as to amount to a repudiatory breach of his employment contract.
In those circumstances, the Court issued an injunction requiring the man to honour the contractual restrictions on his post-termination activities. The agency was also seeking compensation in respect of damage caused to its business by his unlawful conduct, but that matter was adjourned to a further hearing.