Court stops ex-director poaching firm’s staff and clients
A company has succeeded in getting a court injunction to prevent one of its former directors from poaching its staff and customers, and using its confidential information.
The case involved a director who had begun working for the company in 2008 and was given a number of shares. In 2012, a new Directors’ Service Agreement (DSA) was drawn up, which contained various restrictions on what directors could do once they had left the company.
The agreement included a non-disclosure and confidentiality clause which obliged directors and employees to return sensitive documents once they left the company.
In 2013, issues arose about the way the director was using the company credit card, which resulted in him having to leave. He then entered into an agreement to sell back his shares. A share sale agreement was drawn up which restated the conditions in the DSA and added some new ones.
The director wasn’t allowed to compete with the company for 12 months and could not solicit its customers for two years. There were also clauses preventing the poaching of staff.
The company then discovered that the director had set up his own business and had started using its confidential information to further his own interests. He was also providing quotes for restricted customers and had poached one the company’s employees.
When he failed to respond to letters reminding him of his obligations under the agreement, the company applied for an injunction to enforce the restrictive covenants.
The court held that it was clear from the documentary evidence that the director had breached the agreement. The enforceability of the restrictive clauses was a serious issue that would have to be settled by the courts at a later date.
In the meantime, it was right to grant the company an injunction preventing any more breaches before the issues could be resolved at a full hearing.
Please contact John Carter if you would like more information about the issues raised in this article or any aspect of employment law and protecting your business.