Court Rules Firms Can Stop Workers Taking Information

Acivil case before the Suva High Court has paved the way for companies wanting to protect intellectual property rights and confidential information from their competitors. High Court Judge Justice Deepthi Amaratunga’s ruling has stopped a man from taking up employment at a rival company, in a bid to protect information.

The case was ruled on on July 6, 2018.

Aquaheat South Pacific took a former employee, Melvin Singh, to court after Mr Singh “resigned” to join a rival company, Mechanical Services Limited.

This despite a clause in Mr Singh’s contract with Aquaheat South Pacific that apparently barred him from doing so.

They were represented by Suva lawyer Jon Apted.

The clause stated: “You agree that at any time during your employment or for the relevant period following the termination of your employment with the company or any related holding company, you will not for any reason (directly or indirectly), without prior written consent from us:

carry on or be connected engaged or interested either directly or indirectly or alone or with any other person or persons whether as principal, partner, agent, director, shareholder, employee or otherwise in any business which competes, may compete with the business of the company in relation to electrical, mechanical and refrigeration contracting, servicing, consultancy and advisory services.

“This restraint applies for period of six months following the termination of your employment and with a 50 kilometre radius directly in relation to the company’s business premises in Fiji.”

Mr Singh had tendered his resignation to Aquaheat South Pacific which was not accepted, court documents say.

According to court documents, he was then offered leave of absence and, on his return, was to be given a new company car and a pay rise. However, in this time, he took up employment with Mechanical Services Limited, a major rival company.

Justice Amaratunga in his ruling said: “In the ‘information age’ with vast developments in the field of information technology, the importance of information relating to a field of business is key to success and also for survival in a competitive market driven knowledge economy.

“Since the global trend is for knowledge-based economy, the information is a valuable asset and should be closely guarded not only for privacy but also to prevent undue advantage and to encourage healthy competition among the players in a field of business. “So information can be protected in certain circumstances when they are commercially sensitive information.”

He added that “considering the importance in business information that is confidential, and also to promote healthy competition among the players in a level playing field, the restraint on confidential information are enforced through restraint of trade clauses in employment contracts, but these clauses needed to be justified to give legal enforceability.” Justice Amaratunga further noted that if “such restraint is not recognised in law, an employee who obtains confidential information can, in a short time period, leave such an organisation and disclose it to a business rival, thus making undue advantage to them and detriment to the previous employer.”

In his final orders, Justice Amaratunga has restrained Mr Singh from “carrying on or be connected, engaged, or interested either directly or indirectly or alone or with any other person or persons whether as principal, partner, agent, director, shareholder, employee or otherwise in any business which competes, may compete with the business of the plaintiff (Aquaheat South Pacific) in relation to electrical, mechanical and refrigeration contracting, servicing, consultancy and advisory services.”

This restraint applies for period of six months from April 13, 2018 for remaining period till October 13, 2018 and with a 50 kilometre radius directly in relation to the plaintiff ’s business premises in Fiji.