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Suspect An Employee of Disloyalty? The Law Can Move Fast to Help You!

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

Businesses often have no choice but to allow employees access to sensitive trade information despite the obvious risks which that entails. However, one High Court case revealed how fast the law can move to stem any leaks which may arise from disloyalty.

A company specialised in organising ‘summit’ meetings at which senior executives could meet and get to know one another. It had built up an archive of high-level contacts and confidential customer information over many years of trading which was vital to its success.

Following a senior employee’s resignation, the company suspected that he had taken that and other information with him. He had set up a business of his own, operating in a similar field, and was alleged to have sent confidential company documents to his home email address as the date of his departure approached.

The employee’s contract contained a number of confidentiality, non-compete and non-solicitation covenants which, amongst other things, forbade him from misusing company information or working for a competitor for 12 months. The company launched proceedings to enforce those provisions.

In his defence, the employee accused the company of flagrant breaches of his employment rights and argued that he had been constructively dismissed. He denied breaching the covenants, also insisting that they were in any event too broad and one-sided to be enforceable.

In granting an interim injunction against him, however, the Court found it strongly arguable that disclosure of the relevant information to a competitor would cause real damage to the company. The year-long restriction on his involvement with a competitor was also not on the face of it unreasonable.

The injunction would not sterilise his professional skills or prevent him from making use of his expertise as a manager and salesman in a non-competing field. In the circumstances, the balance of convenience fell in the company’s favour and it was appropriate to make an order holding him to the terms of his contract.

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