In a recently reported case, the importance of having a properly drafted employment contract — and in particular, the inclusion of a non-compete clause — was highlighted.
In this case, the owner of a property management company employed a friend who worked for him for five years before being summarily dismissed. The dismissal arose after the employee downloaded, or attempted to download, client contact details, with the inference that he was doing so in order to set up a competing business.
The Tribunal’s Decision
The Employment Appeals Tribunal held that the dismissal was unfair, as proper and fair procedures were not followed. When the company owner discovered the attempted downloading of client information, he immediately dismissed the employee without investigation — making the dismissal automatically unfair.
However, in light of the employee’s “disloyal and inappropriate” behaviour, the Tribunal awarded €0.00 compensation to the employee.
Lessons for Employers
Given the importance the company owner placed on protecting his client contact details, what is surprising is that he had not taken stronger measures from the outset. Had the appropriate non-compete and non-solicitation clauses been included in the employment contract, the employer would have had far more robust options available when the employee attempted to take client information.
In this case, the only positive outcome for the employer was that he did not have to pay compensation for unfair dismissal — though he was ordered to pay over €3,500 in respect of annual leave entitlements. This was only after a lengthy legal process and the associated costs of defending the action.
What Non-Compete and Non-Solicitation Clauses Do
A non-compete clause essentially states that an employee may not establish or work in a competing business within a certain geographical area for a set period after leaving employment.
A non-solicitation clause prevents an employee (or former employee) from taking or using important company information such as client lists, pricing details, supplier arrangements, or other sensitive business data.
For any business where client relationships, trade secrets, or supplier arrangements are vital, these clauses are an essential form of protection.
Protecting Your Business
If you need assistance in drafting appropriate employment contracts — or reviewing your existing contracts to ensure they provide the right level of protection — we can help.
Maria O’Donovan & Co. Solicitors — practical legal advice for Irish businesses.
