Employers should avoid seeking detailed revenue, remuneration or commission information from prospective employees and should assume such employees are contractually restrained from disclosing it. Employers should also consider carefully how confidential information is defined in contracts with their employees to ensure that all relevant information, including revenue, remuneration and commission information if appropriate, is covered.
Mr Pagliaro and others (the Advisors) were formerly employed as financial advisors by Wilson HTM Investment Group Limited (Wilson). During the term of their employment, the Advisors started negotiations to join Wilson’s competitor, Ord Minnett Limited (Ord Minnett), and in August 2012 they commenced employment with Ord Minnett. Wilson brought proceedings alleging that the Advisors breached their employment contracts in several respects and that Ord Minnett induced the Advisors to breach their employment contracts.
Did information about the revenue generated by Wilson’s employees constitute confidential information?
Wilson alleged that the Advisors provided confidential information to Ord Minnett regarding the revenue generated by Wilson’s employees.
While there was no express reference to "revenue" in the definition of “confidential information” in the employment contracts, the Court considered that as a matter of construction, the breadth of the language of the contracts, in particular the expression "information relating to" Wilson’s "business affairs", suggested that the parties intended that the revenue figures were to be treated as confidential information.
The Court further noted that despite Wilson being a public company with reporting obligations, there was a distinction between the specific revenue information provided to Ord Minnett (which enabled certain individuals to be identified and targeted as high income earners) and the more general, company-wide information that Wilson was required to disclose in its annual report and to the ASX.
The Court also dismissed Ord Minnett’s argument that a finding of confidentiality would be anti-competitive and against the public interest, declaring that Wilson had a “legitimate commercial interest to protect their business from an exodus of its workforce by reason of competitors stealing a march on it by use of its confidential information.”
Did Ord Minnett induce the Advisors to breach their employment contracts?
The Court considered that the Advisors’ actions, in taking up positions with Ord Minnett and persuading other employees to do the same, constituted:
- a breach of an express term in their employment contracts not to disclose confidential information;
- a breach of an express term to use their best endeavours to promote and enhance Wilson’s interests and not to do anything that may be harmful to Wilson; and
- breaches of their implied obligations of good faith and loyalty towards Wilson.
The Court was satisfied that Ord Minnett intended to induce the above breaches of contract by making a competitive bid for the Advisors to work for them, and accordingly was held liable. The Court awarded damages to Wilson of $174,416.
Wilson’s claim against the Advisors settled.
See the case.