Employment Law

May 24, 2022 0 Comments

Employment Law

Meghan’s action of leaving her current employer, Bartholomew Weissman (BW), for Sumner-Gordon (SG), a direct competitor, will amount to a breach of duty if she signed a non-compete agreement with BW. Under a non-compete agreement, a covenant is established between the employer and the employee, especially people in middle and or upper-level management positions to agree not to work for competition or start a competing business for a specified period after the end of their employment. They remain legally enforceable as long as a specified period (restraint). The duration should be reasonable and tied to a reasonable geographic restriction to both the employer and the employee. Brown & Brown, Inc. v. Johnson, 115 A.D.3d 52, 980 N.Y.S.2d 631 (2014) presents a restraint that was regarded to be overly broad, unreasonable, and unenforceable. . The restriction will determine whether Prister was an essential trade secret to BW. Already, Meghan’s groundbreaking algorithm nicknamed Prister has revolutionized BW’s business that deals with the high-speed analysis of confidential documents, which constitute 95% of the company’s income. This makes her algorithm very important to the company. As such, it could be assumed to harm the company’s legitimate interest.
Meghan, also being a skillful employee of BW, is held under certain regard to legitimately have the potential to affect BW’s business interest. She developed Prister, a very important algorithm for BW; as such, there is a high potential that she can be held liable of breach of duty by sharing Prister to SG whether she is under employment or off BW employment (relative to her contractual terms). In Hivac v Park Royal Scientific Instruments [1946] Ch 169, a case concerning duty not to work for a competitor’s as it is a breach of duty; skilled workers during their free time, which implies time not allocated within the contract to work for their original employer, brought about a conflict that the employees had breached the duty of good faith and fidelity and worked for their employer’s competitor in their own spare time . The Court of Appeal held that the employees had breached their duty of good faith and fidelity, liable to their employers. Meghan should establish whether, within her contract, there is a non-compete clause following her end of employment with BW. As per the case study, it is not invariably under all circumstances that Meghan has the right to compete with her employer post-employment.
Meghan may be free to subsequently compete with her employer upon her contractual obligation termination, given that there is no restrictive covenant included in the said employment contract. Restrictive covenants like non-compete agreements bar employees from competing with their employers after termination for a reasonable period and within a reasonable geographic space. Research further reveals that a restrictive covenant expressively prohibits Meghan from working with the employer’s competitor after employment for a specified period. . In the UK, common law position is that such a ‘non-compete’ restrictive covenant, unlike public policy, is enforceable, as long as it is no wider than necessary, and unreasonably imposes a restriction on the employee, and dictates adequately that a breach of contract affects the company’s legitimate interests
In Faccenda Chicken Ltd v Fowler [1986] IRLR 69, the duty to disclose trade secrets after the date of termination of employment was guided by whether the information used was imparted to the employees in the course of their employment in the initial company and whether they amounted to trade secrets of the employer . Trade secrets include all technical information that sets a company apart from its competitor and serves as the basis for the company’s superiority over its competition; it may include information about the company’s manufacturing process, designs and computer programs, commercial information, suppliers, clients, and advertising strategies. They are aspects that work to protect the company‚Äôs legitimate interest under reasonable measures.
Meghan’s knowledge and employability skills are transferable from one employer to the next. Still, her use or recreation of Prister (a trade secret) in SG is guided by the existence of a restrictive covenant between her and BW and its similarity to the preexisting Prister in BW. However, it is upon her previous employer to include a restrictive covenant clause in the employment contract with Meghan. This is to say that in the case the employer has failed to include this contract, Meghan cannot be held liable for working with Prister, or giving Prister to SG. Restrictive covenants have the capacity to prohibit employees from disclosing any confidential information or trade secrets of their previous employer to their new employers. These express terms work to complement the terms of the contract of employment and increase protection available to employers. Printer in a manner is the information used by the employee about the employer’s business, imparted and created by the employee during her tenure in BW, and in confidence, and given that it works on 95% of BW’s revenue, it amounts to reasonable trade secrets of the employer. Meghan could be held liable by BW in the event that she works for a document handling company such as SG in the period of two years after her termination or end of contractual obligation at BW.
The crime of solicitation is commonly rooted under English law. It was first adjudged under substantive common-law offenses in 1801. Commonly regarded as a felony, an offense, or an aggravated misdemeanor detrimental to public or private welfare, solicitation is commonly punishable by a fine under corporate law. A no solicitation rule prohibits an employee solicitation of other employees or customers during their duration in the employment and for a specified period after the employment. Researchers express that employees may agree in a non-compete or compete period too, directly and indirectly, to avoid inducing any other employee, contractor agent, or client from their employers to terminate their relationship with their company towards a competing interest. This is subject to any manner that may materially interfere with the current relationship they have with the company, materially towards their company’s business goals, or in an attempt to higher in direct contradiction to their original company’s goal. Suppose a non-solicitation covenant between Meghan and BW specifically bars her from competing. In that case, she will be legally obligated not to contact their customer or try to persuade them to shift to SG. If she had signed the contract for two years, and it prevented her from contacting customers of BW after she left BW, Meghan would be strictly prohibited from contacting them in that two years. If she does, she would be legally held liable by BW. Nonsolicitation serves an important purpose in any business. It implies the time, money, and resources a business spends to build their client base or customer list or invest in training their employees. If BW has a solicitation agreement with Meghan, she will be prohibited by law from soliciting customers from BW to herself or SG.
Cabrelli D, Employment Law (Oxford Univ Press 2022)
Clarkson K, Miller R, and Cross, Business Law: Text And Cases (14th edn, Cengage Learning 2017)
Twomey D, and Greene S, Labor And Employment Law (15th edn, South-Western Learning Cengage Learning 2013)
WIPO, ‘Trade Secrets’ (Wipo.int, 2016) accessed 20 January 2022
Brown & Brown, Inc. v. Johnson, 115 A.D.3d 52, 980 N.Y.S.2d 631 (2014).

Faccenda Chicken Ltd v Fowler [1986] IRLR 69

Hivac v Park Royal Scientific Instruments [1946] Ch 169

Rex v. Higgins, 102 Eng. Rep. 269 (KB 1801)