An employee wanted to set up a his own practice in competition to mine. He assumed that he would be given the part of the practice which he helped to set up in a neighbouring town. He was told that he would have to buy that part of the practice, which upon investigation, I cannot sell for another 18 months due to other contactual agreements. He has proceeded to use information obtained through his contact with the clinic and his employment with me to set up his own contract upon expiration of the existing one. I suspect he has taken client information and has been informing his client of his proposed change for abut 3 months. Yesterday he was summarily dismissed for profession misconduct on advice from the professional association and registration board. Is there legal action I can take to ascertain if he has taken client contact information and restricting his use of it to establish his own business?
professional association and registration board
Hello and thank you for your question.
Usually, the best way to prevent this type of situation is to have a restraint of trade clause in your contract with your employee, in which case you can take action to prevent him from setting up in competition with your business, at least for reasonable period. With such a clause you may sue an employee (or obtain orders restraining their business from operating) who sets up in competition with no other evidence than that they have done so.
If you do not have any such explicit restraint of trade in your contract with the employee, then your only recourse is to rely on the implied obligations which constrain employees from misusing the confidential information of their employers for their own personal use. So you will need to prove somehow that they have in fact taken confidential information from your business and used it to benefit their own.
Typically such confidential information might consist of client lists, or lists of contractors, and absent an admission by the former employee that they have taken such lists, it is usually necessary to confirm with numerous clients that they have been contacted by the former employee.
Note that you will need to confirm it from many sources and preferably people who you can previously confirm had no contact with the employee.
It is important to understand that you cannot stop your former employee from contacting persons who he/she met through your business (absent a specific restraining clause in your contract), so it is perfectly legal for a former employee to contact your clients that he has previously dealt with, but it is not legal for him to take your client lists and simply do a mail out to them to promote his/her new business.
Provided you can satisfy a court that the he has been using a client list or other confidential and commercially valuable information, you can sue him and will likely obtain an award of damages and/or an injunction preventing him from using such information in future. If you can establish he/she has 'taken' significant clients from you, then damages could be significant, but if not a law suit may not prove much.
Often the better course is simply to require them to return all such lists and not to use such information, and to merely threaten a law suit if they fail to comply.
Naturally, if you decide to take legal action you will need to engage a lawyer.
I trust the above assists your understanding.
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Thank you and good luck.
Dip Law LPAB - Sydney based lawyer
He put in a proposal for a contract whilst still employed by me, using information an contacts from my business. He negotiated for himself whilst carrying out duties as my employee. What course of action can I take?
As I said at the end part of my previous answer you can either sue him or just warn him to stop using your material.
Because of the costs involved in legal action, I would only consider suing him if you are finding a significant number of your clients are being stolen by his business, because otherwise you are unlikely to recover much.
Even if you do just decide to sue him, engaging a lawyer to draft a letter demanding he cease will be more effective that just asking him to stop yourself. Engaging a lawyer for this purpose shouldn't cost more than a few hundred dollars.
I trust the above assists.
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