A decision of the Court of Appeal deals with the issue of whether there is a breach of contract or fiduciary duties, when an employee does not tell his employer that he is taking steps to compete upon leaving his job.
Employees owe their employers a fiduciary duty which includes not setting up or working in a competing business whilst still working for the old employer.
· The Court held that merely taking preparatory steps to compete does not necessarily mean that there is no breach of contract or fiduciary duty.
· In this particular case, however, the claimant’s contract did not restrict his right to take preparatory steps to compete.
· The Court also ruled that the contract would have to be worded in clearer terms if the employer had intended to remove the employee’s right to take preparatory steps to compete.
It is important that employers draft competition clauses clearly.
The contract should expressly ban employees from carrying out all competitive or preparatory work whilst still in employment and should require the employee to report such work to the employer.
Drafting such provisions is a complex exercise upon which legal advice should be sought.
Helmet Integrated Systems Ltd -v- Tunnard & Others