Does that confidentiality clause in your organisation’s employment agreements really produce any practical results when it comes to protecting the organisation from an indiscriminating employee? The case of Spotless Group Ltd v Blanco Catering Pty Ltd [2011] illustrates how employment contracts can be effectively used to hold employees to account.
The case involved the highest ranking manager of the Spotless catering group, Mr Paul Reynolds, and his decision to leave his employment to become involved in a competing business (Blanco). Mr Reynolds used his last months of employment to actively assist Blanco, in direct competition to Spotless, by providing confidential customer and supplier information, sensitive financial information concerning a future bid, and copyright proprietary financial models and document templates.
Whilst an employer may find it difficult to prevent an employee from making some preparation to leave their employment to set up a competing entity, if it is done outside of work hours, and doesn’t interfere with their duties to the current employer, this case illustrates that employees are still bound by a duty to not allow their personal interests to conflict with those of their employer. This also means that employees must not take advantage of opportunities or knowledge they have obtained from their position as an employee for their own gain, or for the gain of someone they know who is in competition with their employer. Mr Reynolds was also found to have breached copyright by reproducing all, or substantially all, of a certain set of Spotless’ templates, which were found to be ‘sophisticated documents, carefully prepared and developed’.
The judges mentioned in this case that these duties will be more demanding on employees the more senior their position. The court awarded $100,000 in general damages to Spotless for Mr Reynolds’ breach of his duties, as well as other injunctions to restrain Mr Reynolds.
Contact us at [email protected] if you have employment agreements you would like reviewed and tightened up, especially when it comes to your confidentiality clauses.
