Employer needed to deal with senior executive resigning and poaching clients

The Situation

Employer needed to deal with a senior executive resigning and poaching clients.

The Managing Director of our client received information that whilst working out a resignation period, a senior executive with extensive knowledge of their operations and key clients was making improper contact with several clients and sounding out a number of staff to come and work with him after he left the company.

 

The Task

The objective of O’Connell The Employment Law Specialists (O’Connell TELS) was to examine the capability of the existing contract of employment to cover both pre and post-employment activities of the senior executive deemed detrimental to the business and to work out a strategy to exit the employee from the company.

Actions

O’Connell TELS solicitors found the existing contract of employment provided some coverage of the possible misuse of confidential information both during and after the employment period of the senior executive.  However, the contract had been worded in such a way that there was no real restraint on the activities of the executive to set up in competition to the business after leaving the business.

O’Connell TELS developed a strategy taking into account the provisions of the existing contract of employment and developed a Deed of Release to “reinforce and supplement” these provisions and cover post-employment misuse of confidential information, including interactions with clients of the business.

Results for the client

The employee has now left the business after signing a Deed of Release which set out clear prohibitions on the misuse of confidential information gained during the employment period with the employer.

While there is some evidence the employee is still intent on pursuing business opportunities with clients of the employer, the terms of the Deed as well as the original Contract of Employment should provide the means for the employer to seek injunctive relieve of the type achieved by the Seven Network with Mel B (see O’Connell e-Bulletin Issue 4).

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