Breaking a termination agreement of confidentiality

In Arthur Owen Carolin v World Power Products (Pty) Ltd – [2021] JA 44/2020 (LAC) JHB the employee started with the employer in 1990. In June 2016, an extremely strained relationship had developed between the employee and the Managing Director. This resulted in the employee approaching the Human Resources Manager to discuss a possible exit plan. This discussion prompted the Managing Director to approach the employee with a view to ending the employment relationship by means of a termination agreement.

A settlement greement was concluded. The employee left the employ of the employer, surrendered his cellphone and company laptop. The employee then commenced employment at Remcor (Pty) Ltd, which was a competitor of the employer. Later that month, the employee generated an email to a number of his former employer’s clients in which he wrote: ‘please see my new contact details below, Remcor’. The employer’s attorney addressed a letter to the employee advising him that he had repudiated the termination agreement by sending this email to customers of the employer.

The agreement provided an amount of R400,000 in full and final settlement before 26 June 2016. However, on the basis of the conduct of the employee in generating the email, the employer had adopted the view that the agreement had been repudiated which entitled it to refuse to pay the agreed sum of R400,000.

The employee’s attorney wrote to the former employer’s attorney denying that the employee had repudiated the agreement by way of the email but undertook to delete and destroy all of the employer’s property in the employee’s possession, including business cards which he had accumulated while in the employ of the former employer.

The employer persisted with the view that the conduct of the employee constituted a repudiation of the settlement agreement which it had accepted. Thereafter, the employee sought relief in the Labour Court (LC).

The Court found that, contrary to the clear terms of the termination agreement, the employee ‘disclosed information emanating from the business cards collected during his employment, that information was clearly customer connections’. The LC concluded that the employee had repudiated the termination agreement, thus entitling the employer to accept this decision and regard the agreement as cancelled.

The employee appealed this to the Labour Appeal Court (LAC). The Court concluded as the employee had generated an email which was captured on the system of his new employer, and which contained the email contacts of a range of the employer’s customers, manifestly constituted a disclosure of the employer’s client lists.

The Court concluded that the employee had exhibited a clear intention not to be bound by the terms of the termination agreement by ensuring a list of the clients of the employer had been disclosed. Hence he was no longer prepared to abide by the terms of the agreement entered into with the former employer.

The appeal was dismissed with costs.