ERA underscores importance of complying with post-employment obligations
The Employment Relations Authority recently dealt with the case of a manager who was found to have recruited his former colleagues, breaching his post-employment obligations.
The worker, Joshua Sinclair served as the Depot Manager at Evolution Traffic Management Limited from July 18, 2022, until October 28, 2022.
During his tenure, Sinclair played a pivotal role in managing the "Field Crew" employees, cultivating professional relationships with them, and gaining intricate knowledge of their skills and qualifications.
Following a disciplinary process initiated by Evolution in October 2022, Sinclair resigned from his position. Soon after, he joined Construct Civil Limited (CCL), a company that later went into liquidation.
Sinclair's actions during this transition raised concerns. He allegedly approached current and former Evolution employees, aiming to recruit them for CCL's traffic management division.
Breach of Non-Solicitation Clause
Evolution accused Sinclair of breaching a non-solicitation clause that prohibited him from soliciting Evolution's employees after his departure.
Despite reminders from Evolution regarding his post-employment obligations, Sinclair purportedly attempted to recruit Evolution's employees for CCL between October 28, 2022, and January 28, 2023.
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Evolution requested written undertakings from Sinclair to refrain from misusing confidential information and soliciting Evolution's employees during the post-employment restraint period.
However, Sinclair did not comply with these requests, leading Evolution to pursue legal action against him.
Manager’s post-employment obligations
Evolution sought a declaration affirming the enforceability of the non-solicitation restraint and alleged breaches by Sinclair, including his involvement in inciting breaches by another employee. Additionally, Evolution withdrew certain claims related to solicitation due to employee concerns about retribution.
The Authority said that Evolution’s post-employment restraint for a period of three months after the ending of Sinclair’s employment was “reasonable.”
“He held a key management role. He had a close relationship with the employees he managed and was in a position to be able to influence them, and did in fact influence them.”
“Evolution had a legitimate proprietary interest in protecting its workforce for a limited period of time following Sinclair’s departure from its employment. The restraint was reasonable in terms of its nature and duration, and regarding the conduct (non-solicitation of employees) it sought to restrain.”
Did the manager recruit former staff?
There was “clear evidence” that Sinclair solicited Evolution’s employees to work for CCL, the Authority found.
“Sinclair breached his post-employment non-solicitation restraint by soliciting [three colleagues] to work for CCL during his restraint period. The evidence established that during his restraint period, Sinclair approached each of these employees multiple times to encourage them to work for CCL.
“Each time Sinclair did so, he breached his restraint.”
‘Employment relationship obligations’
The Authority said that Sinclair “needs to be held accountable for his wrongdoing.”
“The deliberateness of Sinclair’s actions and the significant harm they have caused Evolution, require a firm message to be sent to him, via the level of penalties that are imposed on him, that brings home in no uncertain terms that he is not above the law and that his compliance with employment relationship obligations is not a ‘nice to have’ but is a ‘must have’,” it said.
Thus, the Authority ordered Sinclair to pay Evolution the amount of $40,027.20, consisting of $25,000 total penalties; $11,500 legal costs; and $3,527.20 in reimbursement of disbursements.