High Court Dismisses Application for Interim Injunction Against Former Employee
A former employer has failed in their application for an interim injunction against an employee who resigned in breach of the notice provisions in her employment contract.
Background
In the case of Hine Solicitors Ltd v Jones and another, the employer (Hine) made an application for an interim injunction against a former employee who resigned in breach of her contract of employment. The employee was prevented under her contract of employment from giving notice until she had served a three year minimum period of employment (Contractual Term). She resigned in breach of this clause.
Hine originally sought an injunction to prevent the employee from working elsewhere until the expiry of the Contractual Term. However, that application was withdrawn and Hine instead sought an order to prevent the employee from enticing away or attempting to entice away any clients of the firm. Hine argued the employee had committed a repudiatory breach of contract by resigning in breach of the Contractual Term. It argued that the breach was not accepted and that it was seeking relief to prevent the employee breaching the common law duty of fidelity.
High Court Decision
The High Court found that the Contractual Term was valid and effective. However, it dismissed the application for injunctive relief. Interim injunctions can be used to stop an alleged breach pending a full trial. One of the principles the High Court will take into account in responding to an application for an interim injunction, is whether there is a serious issue to be tried.
In this case, Hine had only raised the employee's alleged breach of contract on her penultimate day at work after she had served three months' notice, and after she had had an exit interview, a handover meeting, a leaving dinner and a leaving presentation. There was therefore a serious question as to whether the employee's alleged breach of contract had in fact been "accepted" by Hine when she resigned.
In respect of the employee's conduct, she had not breached the non-compete provisions in her contract and there was no evidence she had taken any steps to entice clients away from Hine. There was therefore no serious issue to be tried in related to whether she had breached (or was intending to breach) the implied duty of fidelity.
Learning Points
This decision highlights the importance of taking prompt action where an employer is seeking injunctive relief. In this case Hine initially acted consistently with having accepted the employee's resignation, which then caused difficulties when it came to arguing that the alleged repudiatory breach was not accepted.
The case also demonstrates the difficulty of relying on implied duties to protect client relationships. The implied duty of fidelity prevents competition but only during employment. There needs to be an express contractual provision to restrict competition after employment terminates.