How far is too far for head-hunters?

A recent decision of the Supreme Court of New South Wales serves as a warning to head-hunters and businesses who ask potential employees for current employment information in order to offer a more enticing employment contract.

The case

Wilson HTM, a financial advisory firm, claimed that Ord Minnett Limited (Ord), another financial advisory firm, had induced high-level employees from Wilson HTM to breach confidentiality clauses in their employment contracts by asking them to provide Ord with their commission sheets. The commission sheets included detailed remuneration and revenue figures of Wilson HTM that had been generated by the employees.

Ord disputed the confidentiality of the revenue figures, stating that a request of such information was standard practice in the industry and that a restriction on employees from providing this information would be an unreasonable restraint of trade.

The decision

The Court found that even though the Wilson HTM employment contracts did not specifically state that revenue information was confidential, the broad wording of the confidentiality clauses was sufficient to cover revenue figures. In addition, the Court held that revenue information should be protected to avoid employees being enticed to other companies by higher remuneration packages.

Ord were ultimately found liable for wrongfully obtaining confidential information from the employees by requesting them to provide information on their current employment, knowing that it was in breach of their employment contract to do so.

The Court also found the Ord had intended for the employees to breach their employment contract by negotiating an attractive group package deal with them to induce further employees of Wilson HTM to move to Ord.

Consequently Ord were liable for damages of almost $200,000 and were restrained from using, publishing or otherwise dealing with the information they had received from the employees.

How this affects businesses

This case highlights some important considerations for businesses wishing to induce a competitor’s staff to work for them. In particular, businesses should not request information on their competitor which may be in breach of the prospective employee’s employment contract and which may harm the business of the competitor.

For further information or advice on confidential information in a commercial and employment setting, contact Certus Legal Group.