by Nick Poole of Latimer Hinks Solicitors
A RECENT case in the Court of Appeal has highlighted the serious issues companies will face if they fail to protect their customer base and confidential information in employee contracts.
For former Caterpillar employee Huesca de Crean, landing a job with the customer she had been serving during her time at the plant company looked like a step up in her career.
That was until her former bosses sought to stop her in her tracks, as they thought confidential information could be at stake.
Although Ms de Crean won at every stage, her case went all the way to the Court of Appeal, where the judges came down on her side, saying that it’s up to the company to get its employment contracts right.
The company could have imposed a reasonable level of restriction on Ms de Crean if they had done it through her contract, and the message from the court was that they would not close the stable door for them, once the horse had bolted.
Companies can’t expect the courts to deal with poor employee contracts.
When Ms de Crean worked for Caterpillar Logistics Services she was responsible for the relationship with a particular client under a long-term logistics services agreement, where she had access to a large amount of confidential information including legal advice in relation to the client’s contract.
When the client offered her a job, she accepted, knowing that there was a clause in her contract with Caterpillar that meant she could not discuss the confidential information outside the company, but there was nothing to stop her from taking up the new job.
But Caterpillar applied to the courts, to try to get a barring order that would stop her being involved in anything to do with their contract, and demanding she be kept out of any dealings. They also tried to get a court injunction to prevent her from disclosing confidential information.
The case went first to the High Court and then to the Court of Appeal, and each time they refused both the barring order and the injunction. The barring order was refused on the grounds that it was excessive in an employer/employee relationship, because it was trying to restrict freedom in the labour market.
And the injunction was rejected as well, because Ms de Crean had already given Caterpillar an undertaking not to release any confidential information and the judges said this was sufficient, looking at her good conduct record.
A timely reminder to businesses to consider again the thorny issue of employee restrictive covenants.