28 November 2014
Injunctions send strong message to ex-employees
The employment team at B P Collins LLP is often called to advise large organisations undertaking restructuring exercises. Employment law partner, James Townsend, was recently asked to comment on a leading ICT retailer's collective consulting obligations, following a decision to vary its sales commission scheme, which resulted in five members of staff joining a direct competitor.
Following their departure, it became apparent that several changes had been made to the client's database and some parts had been unlawfully extracted.
James Townsend was approached by the client and their overseas parent company to investigate the issue further, upon which it was discovered that the five employees had not only effectively sabotaged parts of the database but had been contacting several of the firm's customers. The investigation also uncovered that another ex-employee had also extracted data and was continuing to contact customers from his new position at another rival company.
After exploring and discussing all their options, the client decided that a strong and decisive message needed to be sent to all their competitors and subsequently began proceedings to seek injunctive relief. James and the team drew up the necessary paperwork and both competitors and ex-employees were served papers on the same day as proceedings were issued.
The following week an interim hearing was held. One former employee and his employer settled the matter by agreeing to deliver all information back to our client and paid a five-figure settlement to cover the costs our client had incurred.
However, the remaining five ex-employees indicated that they would be beginning proceedings for constructed unfair dismissal against our client.
At the interim hearing, the competitor firm and the former employees served affidavit evidence. In response, B P Collins prepared further affidavit evidence and commenced preparations for a full hearing on the matter. However, due to the team's strong approach and resilience, the other side conceded and negotiated settlement terms.
As part of their settlement, each individual stated they would provide undertakings affirming that they would not compete with their former employer, that all information would be delivered back to the IT firm and an account set up for any resulting profits to be paid to our client. In addition, they also agreed to pay a substantial five-figure sum to cover the cost of proceedings.
Our client obtained an excellent outcome given the risk posed to them by its former employees and competitors. It also ensured they sent a clear message to the industry that such behaviour would not be tolerated.