Restraint of trade cases usually revolve around whether the
clause is appropriate to protect a legitimate interest of the
employer, and no broader in duration and scope than is necessary to
protect that legitimate interest.
However, well known stock brokering firm Ord Minnett recently
fell foul of restraints in a different way. It used the
confidential information of Wilson HTM, an employer of some
individuals who were angling for jobs at Ord Minnett, to try and
'lure away' even more of Wilson HTM's employees.
Background to the case
During discussions with several disenchanted Wilson employees,
Ord Minnett asked them to provide information regarding the revenue
earned by other employees of Wilson, to assist Ord Minnett in
arranging attractive packages to lure more of Wilson's
employees to transfer. The information included commission
statement sheets of other employees of Wilson. Ord Minnett ended up
with precise revenue figures for 18 individuals from the sheets,
which also disclosed the identity of Wilson employees that Ord
Minnett might try to poach to achieve a "team
The Wilson employment contracts included provisions about the
confidentiality of both the employee's remuneration, and
information regarding the business affairs of Wilson. Justice
Bergin in the Supreme Court found that "business affairs"
was broad enough to cover information regarding revenue earned by
employees and the reference to keeping remuneration confidential
also indicated the confidentiality of revenue, because remuneration
was closely tied to revenue.
Ord Minnett argued that it was quintessentially anti-competitive
to enforce provisions which lessened the opportunity of the Wilson
employees to obtain better employment. However, Wilson argued that
it had a legitimate commercial interest to maintain a stable
workforce, and was able to protect that interest by restricting use
of confidential information. Justice Bergin agreed.
The Court held that there was a difference between an employee
talking to a possible new employer about their own personal revenue
and remuneration, at a general level, and perhaps disclosing
"some numbers" on the one hand, and on the other,
providing the prospective employer with a raft of information about
the remuneration and revenue of Wilson employees generally.
Justice Bergin held that the fact that an individual employee
might breach contractual obligations by providing specific detail
of their personal remuneration or revenue did not mean that
information, and certainly information relating to others, ceased
to be confidential information. He went on to say that Wilson had a
legitimate commercial interest in protecting itself from an
"exodus of its workforce by reason of competitors stealing
a march on it by use of its confidential information. The case is
not about the commercial morality of competitors luring employees
away from their employment. The issue is whether the defendant
wrongfully obtained the plaintiffs' confidential information to
set the lure".
Having more information gave Ord Minnett much greater capacity
to tailor offers to individual employees and try to assemble a
team. In fact, Ord Minnett was found to be liable for damages for
inducing a breach of contract, because it knew or should have known
that the Wilson employees were employed under employment contracts
including obligations of loyalty to Wilson while in its employment
and to protect confidential information of just this sort. Ord
Minnett was therefore ordered to pay damages of more than
What should employers do?
This case demonstrates that well-drafted provisions in an
employment contract can, in the right circumstances, effectively
protect a business from the illegitimate conduct of employees
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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