Extec Screens & Crushers Ltd v David Rice

Facts

The court was required to determine whether the claimant employer (E) had constructively dismissed the defendant employee (R) and whether the restrictive covenants in R's contract of employment were valid and enforceable.

E manufactured equipment and spare parts used for crushing waste. R had been employed by E as an after sales manager. R's employment contract contained post termination restrictive covenants and a clause stating that he could be reassigned to other duties during his notice period. R was offered a job by another manufacturer (S) as a manager responsible for developing the purchasing and establishing a customer database for crusher spare parts aimed at all well known brands. R signed a contract with S and resigned from E giving the required three months' notice. E initially rejected R's wish to resign but accepted it some days later. Consequently R was assigned to other duties and his mobile phone and laptop were removed. R was then offered an increase in salary by E and withdrew his resignation. He returned to his old job and his mobile phone was returned. However, he was initially forced to share a desk and computer with his replacement while a laptop was on order for him. R changed his mind again and informed E by letter that he would be joining S. He alleged a breach of mutual trust and confidence, saying that E had not allowed him to resign when he originally wanted to, had coerced him into withdrawing his resignation and that he had been demoted to lesser tasks. E accepted the letter as R's resignation.

Held

(1) The relationship of trust and confidence between E and R had not broken down. E had genuinely wanted R to stay working for them in his former role and had returned R's mobile phone on his return to work. Any difficulties that were present during the days in which R actually came back to work for E, such as his having to share a computer with a colleague, were due to the fact that E could not have foreseen R's return. E had quite properly confiscated R's mobile phone and laptop and reassigned him to another project on their acceptance of his resignation, in accordance with the employment contract. Further, E had not prevented R from resigning when he first attempted to. Had R not chosen to withdraw his offer of resignation following E's initial refusal, it would nonetheless have taken effect in accordance with its terms at the expiry of the contractual three month period. R had constantly changed his mind with regards to his employment, and there was no duress or undue influence on E's part. There was no constructive dismissal and therefore the restrictive covenants were binding if valid. (2) R was in a senior position and had access to confidential information including extensive customer contacts. S was E's competitor in that it sold products similar to E, whilst R was specifically recruited to develop the purchasing and establish a customer database for products that E sold, and for his knowledge and information about E's products and markets. Further, the restrictive covenant in the employment contract only sought to restrict the particular type of activities that R undertook during his time at E. Therefore the restrictive covenant genuinely protected against the unfair exploitation of E's trade secrets and trade connection and was valid and enforceable. The covenant covered the period of eight months from the end of the expiry of the notice period, and an injunction prohibiting R from joining S during that period was enforced.

Judgment for claimant.

Comment

An injunction to prohibit a worker from joining a competitor of his former employer for a particular time period was enforced in circumstances where the worker had failed to establish that he had been constructively dismissed, so that the restrictive covenants in the worker's contract of employment that protected against the exploitation of the employer's trade secrets were binding.

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