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High Court Comes Down Hard on Disloyal Recruitment Consultants

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

Memory sticks can fit in any pocket and provide an easy means for disloyal workers to lift their employer’s confidential information with a view to setting up on their own. Exactly that happened in one case in which two recruitment consultants hatched a plot behind their boss’ back months before they handed in their resignations.

The pairs contracts did not include any covenants that might have restricted their activities following their departure. However, they did owe duties of fidelity whilst still in their jobs and their contracts did contain clauses requiring them to respect their employer’s confidentiality both before and after their resignations.

When handing in their notice, they were open as to their intention to set up a rival business. However, they had started to make plans for doing so about seven months earlier and had already incorporated a company of their own. One of them had used a memory stick to download information from the employer’s database and the other had obtained job candidate and client lists from the company’s IT provider. Before their departure, approaches had already been made to a number of candidates with a view to persuading them to shift their allegiance.

After the truth was discovered, the consultants admitted many of the allegations of misconduct against them and an emergency injunction was obtained that forbade them from disclosing or making use of the employer’s confidential information and trade secrets. The effect of that broadly drawn order was that the pair could not do business with anyone named on the candidate or client lists, even if they were contacted independently.

In reviewing the case, the High Court maintained the rigorous embargo in respect of the employer’s confidential information. The interim order was, however, amended to ensure that the consultants could pursue their legitimate trade. Given the modest progress that the rival venture had made in the weeks since the injunction was granted, the Court also refused to issue a so-called springboard order that would have prevented the consultants from gaining a head start in the relevant recruitment market.

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