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12-07-2017

In Thomson Ecology Ltd and another v APEM Ltd and others, H was operations manager at a laboratory and was the most senior employee at its premises. He only had a statement of terms and conditions which provided for a one month notice period.

H resigned and was put on garden leave. After his resignation, another 17 biologists left to work for the same competitor and it became apparent that H had been organising a team move.

The employer brought a claim against H for breach of the implied duty of fidelity. The Court found that H had breached this duty by failing to disclose the threat to the employer’s business and by helping the competitor to poach his ex-employer’s staff.  It was irrelevant that the staff were entitled to leave on one month’s notice. The Court looked at his seniority and role.

The case demonstrates that a lack of a formal written contract of employment is not always fatal when trying to protect an employer from employees who leave to competitors.

However, the employer’s position would have been much stronger had it taken a few simple precautionary steps:

  1. It should have ensured that all senior staff had formal written contracts of employment.
  2. It should have included within those contracts restrictive covenant clauses, garden leave clause and confidentiality clauses.
  3. It could have included in the contract an express obligation to disclose the wrongdoing of the employee or of other employees.
  4. It could have included in the contract an express obligation of fidelity.
  5. Where it is very important that team members do not leave together, an employer can also consider having staggered notice clauses or rolling notice clauses, to space out the employee’s departures.

Sarah Rushton (srushton@moonbeever.com)

This is intended for general information only and should not be considered as giving advice in relation to any individual case nor be taken as applying to any particular case. No liability is accepted for any such use of the information.

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