Employment Law Background
The Supreme Court of NSW in Georges Apparel Pty Ltd v Giardina [2017] ordered that the former business development manager of a school uniform importer and manufacturer hand over her electronic files and devices for inspection, on the basis that she was suspected of taking confidential information and utilising it for her own business.
Facts
In essence:
• A school uniform importer and manufacturer has alleged that its former business development manager stole confidential information through taking confidential files, including computer programs designed to assist a computerised embroidery machine to embroid school logos onto uniforms
• The employment contract required her to perform her duties, including protecting and promoting the interests of the employer. It also required her not to misuse or disclose confidential information during or after her employment
• Her contract also contained a restraint of trade clause. This prohibited her from competing with the business in any way, including soliciting customers in NSW for up to 6 months after leaving the company
• The employee allegedly set up her own sales agency business whilst she was still an employee. It was alleged she sold school uniforms imported and manufactured by other wholesalers to the company’s customers
• The company also sought access to the manager’s computers, tablets, mobile phones, electronic storage devices and digital files to determine whether she had breached her employment obligations in accessing the embroidery files
• However, the manager argued that her post-employment obligations were misrepresented to her, made in “bad faith” and that the employer engaged in deceptive conduct during the negotiation of her contract.
• She claimed she discussed with the company about re-negotiation of the non-compete clauses as she was going to set up a similar business. However, the company stated these provisions were necessary to prevent “abuse of its confidential information”
Decision
• Justice Robert McDougall ordered the manager to hand over her electronic devices. However, he acknowledged that as this would cause the manager “very real” financial hardship because she required the devices to run her business, the inspection needed to be undertaken “very expeditiously”
• However, he decided “absolute prohibition” on the manager working in competition with the company was not necessary to balance both parties competing interests
• In coming to this conclusion, the Court balanced the interests of both parties, in considering that unless the company was able to determine if any confidential information had been stolen, its business interests would be damaged and that the manager would be damaged financially if she were to unable to work for an extended period
• The judge acknowledged that the only way this balancing could be achieved was through enforcing the employment contract’s post-employment restraints and to allow the employer to assess the employee’s electronic devices to determine whether she stole the confidential information.
• The Court held that such an order “will achieve substantially all that is necessary to protect the [employer] whilst minimising the unavoidable harm” to the manager
Tips for Employers
• review this decision
• seek the assistance of an employment lawyer to understand the impacts of this decision
• ensure that policies and procedures concerning surveillance in the work place are compliant with legislation
• fairly, consistently and lawfully respond to breaches of employment contracts and employment law policies
• ensure that restraint of trade provisions in employment contracts are negotiated and drafted having regard to the nature of an employee’s role
• damages can apply for breaches of employment contracts and some employment law policies (which an employment lawyer can advise on)
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.
