23 March 2012

Bully-boy tactics cut no ice with the Court of Appeal

Heavy handed tactics by employers also came in for criticism in Caterpillar Logistics Services (UK) Ltd v de Crean, where the Court of Appeal upheld the refusal of an injunction application against a former employee.

Mrs de Crean had worked in a senior capacity, and had a contract which included a confidentiality agreement but did not include terms restricting her activities after her employment ended. Three weeks after she resigned to join another company, the employer, with no prior warning, sent a long letter to her threatening legal proceedings. It made allegations of misconduct and demanded that she give undertakings not to use or disclose confidential information as they defined it, and also agreeing not to carry out certain areas of work in her new job. She was not prepared to give undertakings in these terms and the employer attempted to seek an injunction, first in the High Court and then in the Court of Appeal.

Both courts refused the application, and were highly critical of the employers' overreaction to the situation and their high-handed actions when (i) they had chosen not to incorporate any express restrictive covenants in her contract of employment, and (ii) the employee's role was as an ordinary employee, not a director of the company or another position where she would owe higher duties of good faith.

In particular, the employer: 

• Did not clearly set out what they meant by "confidential information" and sought an open ended injunction which the CA described as "hopelessly wide and vague"; 
• Gave her an unreasonably short time to respond to their letter; 
• Had made no effort to seek to resolve its concerns amicably before resorting to threats of proceedings; and 
• delayed serving Particulars of Claim until after the initial court hearing - a practice the Court said should be discontinued, even if it had become commonplace. 

The court was also clear that there was no reason to make an order as stringent as the one requested where Mrs de Crean would have been prevented from performing a range of duties because there was a possibility that confidential information might have come into play.

Employers sometimes adopt the tactic, if concerned about competitive activity by departing employees, of chancing their arm and threatening proceedings, when they don't have evidence of any breach of duty, or may be aware that there are flaws in the drafting of their restrictive covenants which mean they are likely to be unenforceable. While such tactics may sometimes be effective if the employee caves in quickly, for fear of incurring heavy legal expenses, this case demonstrates that pressing on with proceedings without a good foundation will be a futile and expensive process.