We answered questions about employees breaching enduring
obligations following termination of their employment for
Q: I've just found out one of my employees has been
trying to set up his own company behind my back and I think it
would be in direct competition with mine. I also know he has been
trying to solicit our clients and one of our staff members. Do I
have the right to search his work emails for more evidence? How do
I resolve this without it getting messy and ugly?
A: This type of situation is concerning to
stumble across and raises a number of issues. For example is the
employee potentially in breach of their on-going employment
obligations, are they taking confidential information as well as
attempting to solicit clients and or staff, and if they leave, is
there an enforceable restraint of trade in place to help protect
During the employment relationship, an employee has duties of
confidentiality, fidelity and good faith to their employer.
An employee is not prevented from taking some preparatory steps
in setting up a competitive business (such as incorporating a
company or drafting a business plan). However they must not to do
so in breach of their duties to their employer. In this situation,
attempting to solicit staff or clients for the employee's new
business while still employed is clearly in breach of these
After an employee has left however, the duties owed to the
employer depend on whether there is a reasonable and enforceable
restraint of trade clause in their employment agreement. Rest
assured though, that the duty of confidentiality survives the end
of a person's employment, whether their position is terminated,
or they leave of their own free will.
So how best to resolve the issue without things getting
Keep in mind throughout the process that any action taken to
resolve the matter must be in the range of what a fair reasonable
and employer could do.
It's then important to first ascertain if there is any
weight to the information received.
Usually workplaces will have an internet and email policy which
outlines that internet and email is provided primarily for business
use and that it will be monitored by the employer from time to
Assuming a policy exists, we recommend reviewing the
employee's emails and file usage, including to see if there has
been work time used for the other business, if there is any
evidence of clients being contacted, and if confidential
information has been emailed by the employee to a personal email
address or downloaded (onto a USB for example).
It may be necessary to consult with the employee about
suspending them while further enquiries are made. A decision to
suspend will be contingent upon the information and evidence
identified at that early stage, the reliability of that
information, the employee's level of seniority and the threat
to the business created by any alleged breaches.
Once those investigations and enquiries have been made,
depending on the information obtained, the matter may result in a
disciplinary process. If so, the employer needs to set out its
concerns to the employee in writing, and:
Provide the relevant information / evidence to the
Invite the employee to a meeting to discuss those concerns;
Reflect on the employee's feedback and then following that
meeting, having considered all of the information relevant to the
matter, decide what disciplinary action is appropriate.
If the concerns above are raised with the employee and the
employee has created a business in competition any resulting
disciplinary process may spark the employee's resignation.
There are many options available to an employer wanting to
protect its business when an employee leaves employment. These
options include writing a letter reminding the employee of their
post-termination obligations, or obtaining an interim injunction,
or search order, or even seeking penalties and damages against the
employee for breaching their post-employment obligations.
To explore any of these options we recommend obtaining legal
advice on the best strategy for your business.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
This WHS decision clarified the interpretation of s 19 of the Work Health and Safety Act 2011 (NSW).
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