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Employment Law – Ex-Employee Restraint Clause Unenforceable    

Employment Law – Background

The Victorian Court of Appeal reaffirmed a decision that an employer was unable to enforce a restraint clause against an employee. The accounting firm’s breach of an employment contract consequently ended its right to enforce a restraint clause against the accountant. The case highlights the importance of carefully assessing any differing views between the employee and employer in employment law.

Employment Law – Facts

In essence:

  • the employee-accountant signed an employment contract in 2012
  • the contract contained a restraint clause that operated for 12 months. Notably, the terms were found to be reasonable by judges in earlier cases
  • the accounting firm expanded its business over 2015-16
  • the accounting firm denied the accountant certain bonuses he believed he was entitled to
  • as a result, the accountant requested payment to which the employer refused
  • the accountant took a week’s leave. A few days after he returned, he informed the employer he considered the refusal to pay the bonuses as a repudiation of the employment contract
  • especially relevant, the account set up his own business. Consequently, the employer sought to enforce the restraint clause

Employment Law – Decision

The Victorian Court of Appeal:

  • concluded that the accountant-employee’s interpretation of the bonus clauses was correct
  • held that the organisational changes could not justify the refusal to pay hence he should have been paid the bonuses
  • found that in conclusion, the refusal to pay was a breach of the employment contract. Consequently, the right to enforce the restraint clause ended

Employment Law – Tips for Employers

Our Matthews Folbigg Workplace Solutions employment law team recommends employers: [...]  READ MORE →

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Employment Law – Unenforceable Restraints

Employment Law – Background

An ex-employee’s post-termination restraints have been deemed unenforceable by the Supreme Court of Victoria. This case highlights the impact of employer’s actions on the validity of a contract of employment. Furthermore, it highlights the limits of post-employment restraints in employment law. The failure to remunerate an employee can result in a constructive dismissal. Consequently, post-employment restraints may become ineffective.

Post-employment restraints are inserted in contracts of employment to prevent an employee working elsewhere. In addition, it prevents the ex-employee from engaging with former clients for a period of time. [...]  READ MORE →

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Employment Law – Ex-Director Restrained by IP

Employment Law – Background

Climate Change Technology P/L (‘CCT’) has sought an interlocutory injunction to restrain a former director and inventor of a thermal energy battery.  The employment law decision raises the importance of documenting relationships.

Employment Law – Facts

In essence:

  • first of all, Dr Patrick Glynn was employed by CCT between 2011 and 2016. He was its principal research officer and director. In addition, Dr Glynn was appointed its chief executive towards the end of his tenure at CCT
  • he invented a thermal energy storage device and assigned a patent to it in 2011. Furthermore, he signed an intellectual property agreement
  • CCT submitted that they spent about $5 million over the last six years on researching and developing the device and associated technology
  • when Dr Glynn quit in 2016, he allegedly retained intellectual property and confidential information in relation to the device. Furthermore, he set up another research and development company and an umbrella company
  • in addition, CCT alleged that Dr Glynn and the companies had been negotiating with third parties he had first dealt with when he was employed at CCT
  • consequently, CCT was granted an interim injunction in March
  • as a result, CCT are seeking the return of intellectual property and confidential information to stop its ‘misuse and dissemination’
  • furthermore, CCT are seeking to prevent Dr Glynn and the companies from exploiting business opportunities which arose while he was director and representative

Employment Law – Decision

Justice Nicholson:

  • noted an intellectual property agreement appeared to be the ‘only express written agreement potentially relevant to the parties’ relationship’
  • noted there was ‘no written employment agreement, no deed of confidentiality or restraint of trade regulating the parties’ relationship or [Dr Glynn’s] post-employment obligations with respect to [CCT] is in evidence’
  • accepted direct supporting evidence Dr Glynn worked full-time as a chief scientist. In addition, he devoted thousands of hours to its project and possessed a significant amount of confidential information about its intellectual property
  • was satisfied there was support for potential findings that CCT was the owner of the intellectual property. Furthermore, such support indicates a large number of digital files were transferred following Dr Glynn’s resignation
  • said it was open to the court to discern from email correspondence that Dr Glynn and the companies had been negotiating with third parties
  • was satisfied that damages would not be an adequate remedy
  • concluded CCT is entitled to an interlocutory injunction. The injunction will restrain Dr Glynn and the two companies from using, exploiting, destroying or altering the ‘project intellectual property and confidential information’
  • the injunction also names entities and individuals whom they are restrained from any dealings relating to the device. Furthermore, it requires the recording of any transactions or dealings in relation to the device

Employment Law – Tips for Employers

Our Matthews Folbigg Workplace Solutions employment law team recommends employers:

  • review this employment law decision
  • seek the assistance of an employment lawyer to understand the impacts of this employment law decision
  • engage an employment lawyer to draft a written employment agreement with a suitable restraint of trade clause relevant to the position
  • engage an employment lawyer to draft a suitable deed of confidentiality
  • update employment contracts in response to this employment law decision
  • consult an employment lawyer if you suspect company confidential information or intellectual property has been misused

Employment Law – More Information

Please call the leading employment lawyers in Parramatta, the Matthews Folbigg Workplace Solutions employment law team on 9635-7966 to speak with one of our employment lawyers. [...]  READ MORE →

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Misuse of Confidential Information – Evidence relied upon after the fact

In the recent decision of Finemore v CMIB Insurance Services Pty Limited [2016] FWC 8517, an employer successfully relied upon evidence of misuse of its confidential information discovered following the termination of employment, in order to defend itself from an unfair dismissal claim.

The Facts

The Applicant had been employed by the Respondent (a small business employer) for approximately six years, most recently in the role of Account Executive. The Applicant was employed under a written employment contract containing several post-employment obligations including an obligation to preserve the Respondent’s confidential information [...]  READ MORE →