Employee who facilitated team move breached his duty of good faith
'The High Court held that encouraging and facilitating a poaching raid on Thomson’s existing client base and staff was a breach of Mr Hall’s duty of good faith'
In Thomson Ecology Ltd v APEM Ltd, the High Court considered whether an employee had breached the implied duty of good faith when he orchestrated a team move to a competitor.
Mr Hall, a senior employee, resigned from Thomson to work for APEM, a competitor. Shortly afterwards, a further 17 employees left Thomson. It became apparent that for some months Mr Hall had been planning to move much of his employer’s business. He had also helped APEM to recruit a substantial part of Thomson’s workforce, and incorporated a company with a similar name. Mr Hall had received only a basic statement of terms and conditions, and was not subject to any express obligations relating to confidentiality or post-termination restrictions. Thomson therefore had to rely on claims based on breach of his implied duty of good faith.
The High Court held that encouraging and facilitating a poaching raid on Thomson’s existing client base and staff was a breach of Mr Hall’s duty of good faith. This duty had also been breached when he disclosed salary details of Thomson’s employees and arranged meetings with the staff to discuss the potential move.
The employer was successful in an application for summary judgment in this case largely because there was extremely strong evidence of the employee’s activities whilst he was still employed. He was also engaged in a senior role. It would have been much harder for the employer to rely on implied terms to prevent competitive activities after employment had ended. Express obligations and appropriate restrictive covenants may also have acted as a deterrent to the employee in this case.
06 Jan 2014