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Key Employee Departed to Work for a Competitor? Consult a Lawyer Today

There are few things more concerning for any business than the departure of a key employee to work for a competitor. However, as a High Court case showed, there is a great deal that expert lawyers can do to guard against customer defection and other damaging consequences of such a move.

The case concerned the head of client services of a company operating in the mail and parcel delivery sector. Following his resignation, he took up a similar post with a competitor. The company asserted that the competitor ran a business which was a carbon copy of its own operation.

The company took action against the employee alleging that he had breached a number of restrictive covenants in his contract which, amongst other things, forbade him from soliciting or dealing with certain of the company’s existing or prospective customers for 12 months following his departure.

He offered undertakings that went some way to meeting the company’s concerns but was unwilling to accept any restriction on his ability to deal with the company’s existing clients. He asserted that such a restriction would profoundly and wrongly interfere with his incipient new career, effectively preventing him from doing his job with the competitor.

In granting an interim injunction that forbade him from engaging in such dealing, however, the Court noted that the company had a legitimate business interest in maintaining its client connections and workforce stability. It was more likely than not that it would succeed at trial in establishing that the non-dealing covenants were justified and enforceable. The injunction, together with the employee’s undertakings, would remain in force pending an expedited trial.

The Court, however, refused to make an order restraining him from misusing the company’s confidential information. In the absence of any evidence that he had retained or copied any of the company’s documents, or threatened to misuse them, there was no arguable case that he had breached or intended to breach any obligation of confidentiality.

Published in
20 July 2021
Last Updated
5 August 2021