FORMER EMPLOYER RESTRAINS ITS EMPLOYEE FROM WORKING IN ANOTHER CORPORATION
Employsure Pty Ltd v McMurchy [2021] NSWSC 139 (24 February 2021)
This is an employment case where the former employer restrains its employee from working in another corporation invoking that the employment contract provides for a three month notice period.
Facts:
Employsure Pty Limited (“Employsure”), the plaintiff, carries on business as a provider of human resources and workplace health and safety services to employers. David McMurchy, the first defendant, worked for Employsure from May 2015 until January this year. At the time the dispute arose he was the manager responsible for the sale and support of human resources.
In December last year, Mr McMurchy agreed to leave Employsure and work for ELMO Software Limited (“ELMO”), the second defendant. His employment by ELMO was to begin in January. ELMO agreed to employ Mr McMurchy as the sales manager for a software platform called “Breathe”. It provides what is described as a “self service HR platform” which is particularly suitable for the small business market, consisting of organisations with fewer than fifty employees.
Employsure’s main claim in the proceedings is for declaratory and injunctive relief against Mr McMurchy. Employsure seeks to restrain Mr McMurchy from working for ELMO.
The origins of the dispute go back to 14 December last year when Mr McMurchy sent a letter to Employsure purporting to terminate his employment. The letter went on to state that his employment would end after 28 days, on 11 January. At this stage Mr McMurchy had already accepted ELMO’s offer of employment.
Issue: Is Mr McMurchy restrained from performing working in ELMO?
Held:
Clause 18.2 of the employment contract which dealt with “outside employment”. It provided that “Without the prior written consent of the Company, the Employee must not, while employed by the Company, be engaged or interested in any other business or occupation (whether paid or unpaid) (Additional Business) that, in the reasonable opinion of the Company, may hinder or otherwise interfere with the performance of the Employee’s duties.”
Furthermore, Clause 19.2 of the employment contract states that “this Agreement may be terminated in writing, at any time by either party, and with the period of notice set out in Item 9 of the Schedule [which specified three months].”
It is undeniable that Mr McMurchy was, when he signed the 2018 employment contract, prepared to bind himself to a three month notice period. The need for parties to adhere to voluntarily undertaken contractual obligations is said to be a matter of particular significance in evaluating the balance of convenience. It also appears clear, on the evidence before me, that at all times after the contract was signed, Employsure was operating on the belief that Mr McMurchy was subject to a three month notice period.
In these circumstances, the court considered that Employsure had made out its case for a restraint under clause 18.2, at least up until 14th of March.
Conclusion: Until 14 March 2021 or otherwise until further order the first defendant be restrained from performing any work or duties for, or at the direction of, the second defendant and from attending any workplace under the control of the second defendant.
