Double-Jobbing

Duty of Good Faith During Employment

Employees have an implied duty of fidelity, loyalty and good faith to their employer. This duty lasts during employment. An employee who divulges secret information or seeks to make a profit from its misuse breaches his employment contract. He may be restrained by injunction from divulging the information. If he makes a profit from the misuse of the information, then the employee must account to the employer for payments received.

An employee may generally work in his spare time. This is not usually a breach of the employee’s implied duties. However, working with a competitor or competing with an employer during spare time, be a breach of the employee’s duty of loyalty and fidelity. Employers have successfully restrained employees by injunction from working for competitors during their spare time on this basis.

This duty of loyalty good faith only applies for so long as the employment contract exists. The duty continues to apply during the period of notice. Breach of the duty may itself entitle an employer to terminate employment.

Parallel Employment

Legislation provides that, subject to conditions an employer shall not –

•  prohibit an employee from taking up employment with another employer, outside the work schedule established with the first named employer, or
•  subject an employee to adverse treatment for taking up employment with another employer, outside the work schedule established with the first named employer.

An employer may restrict an employee from taking up employment with another employer, outside the work schedule established with the first named employer, where such restriction (in this section referred to as an ‘incompatibility restriction’) is proportionate and is based on objective grounds.

Where an employer imposes an incompatibility restriction on an employee –

• details of the incompatibility restriction (including details of the objective grounds on which the incompatibility restriction is based) shall be included in the contract of employment, or
• the employer shall provide to the employee a statement in writing setting out the incompatibility restriction (including details of the objective grounds on which the incompatibility restriction is based).

Limits

The above statutory rights do not apply to seafarers or sea fishermen.

For the above purposes, ‘objective grounds’ includes the following grounds –

• health and safety,
• the protection of business confidentiality,
• the integrity of the public service,
• the avoidance of conflicts of interests,
• safeguarding productive and safe working conditions,
• the protection of safety of patients and people receiving care from the health service,
• the protection of national security,
• the protection of critical national infrastructure,
• the protection of energy security,
• the administration of vital public service functions,
• compliance by the employer and the employee with any applicable statutory or regulatory obligations,
• compliance by the employee with any professional standards for the time being in force

HSE

Objective grounds for the purposes of a contract of employment entered into by the Health Service Executive or a service provider include  the protection of patient health and safety and the State’s objectives of –

• the promotion of public welfare by improving public health,
• the removal of inefficiencies and inequalities in the delivery of healthcare services, and
• assisting in the implementation of a universal healthcare service in which patients are treated on the basis of health needs.

Non-Application Of Statutory Right

Where a collective agreement approved by the Labour Court or registered deals with the above matters, the terms of that agreement take effect in priority to the above-mentioned provisions

The above provisions and rights do not apply to –

• a member of the judiciary
• a person who is in the service of the State as a member of the Permanent Defence Force, or
• a member of the Garda Síochána.

Restraint of Trade

Where an employee leaves employment law to take up a new position with an alternative employer, the previous employer may have legitimate concerns that its confidential information, trade secrets, business connection and goodwill may be jeopardised and taken.  The employer may have imposed restrictions in the contract of employment, which seek to restrain the employee from taking up positions with rivals and competitors. There may be no such restrictions and the employee may seek to enforce his property rights in his trade secret, knowhow and goodwill.

The general principle is that an employer is free to exercise his trade or business and that he cannot be unreasonably restrained after employment. Contracts in unreasonable restraint of trade are void at common law.  Restrictions which are designed to restrain an employee from exercising future employment are presumptively invalid unless they are found to be reasonable and necessary to protect a legitimate interest of the employer.  Even if they are so found, they must be narrowly tailored to protect that interest. The restriction must be no wider than necessary.

It is legitimate for an employer to provide a term in an employment contract to restrict an employee from undertaking activities which may damage its trade secrets or confidential information. “True” proprietary information or trade secrets only will be protected. The information must be of type that has a value that has been developed and is the property of the employer. It must be more than general knowhow and business skill.

The prohibition of competition in itself is not legitimate. Although it might be in the employer’s interest to protect itself from competition, this is not a legitimate interest. There is a very strong presumption in favour of the employee’s freedom to exercise his trade. A contract term, with principal purpose of preventing competition, would be void.

The prohibition of competition may be permitted incidentally, where there is a restraint, which is closely tailored to the protections of a legitimate interest, such as a proprietary trade secret. The restraint must be reasonable in duration, geographical and industry scope. A restriction on employment in the same industry, within a certain area and for a certain time period may be legitimate. What is or is not legitimate depends on the particular industry and circumstances.

Post Employment Restrictions

Even in the absence of a provision in the employment contract, an employer may protect “true” trade secrets and confidential rights after the termination of employment. Where contracts provide for restrictions that apply after termination of employment, they must be tailored to the protection of genuine confidential, valuable confidential information and trade secrets.

What will qualify as true “protectable” confidential information or trade secrets may be difficult to define in all cases. There will be some cases where it is clear that the law should and will protect the information. For example, valuable patents, processes, and software which are the result of significant research and investment are likely to be protected. They have the characteristics of being fairly called the property of the employer. They are so-called “proprietary” rights.

The employer cannot label information confidential and a trade secret unless it has value and is the product of work and expense.  The information which becomes part of the employee’s general knowledge, skill and capability cannot be protected. A proprietary interest cannot be claimed if it is due to the employee’s personal qualities or skills as distinguished from goodwill attached to the business.

Information which has to be compiled and is not easily capable of being remembered is more likely to be protected. Employees are generally entitled to retain learned skills and information and use established personal contacts and relationships. However, copying lists and information is more likely to be a breach of the employer’s proprietary rights.

Under certain legislation and general principles of law, so-called “whistleblowers” may be protected. If the publication of information avoids wrongdoing and is in the public interest the courts may allow disclosure to the appropriate authorities. The interest in publication must outweigh the interest in the protection of confidentiality.  This may, for example, include confidential information about serious misconduct. The disclosure must be made to appropriate authorities and cannot be indiscriminate.

Competing Post Employment

There is generally no restriction on an employee competing with his employer after the termination of employment without a specific obligation not to do so in his contract of employment. However, such a term would not usually be implied.

Clients and customer connection may represent goodwill which can be protected by an express covenant in reasonable restraint of trade. Employment contracts may restrict canvassing and soliciting customers, clients and former fellow employees for a certain period after employment. The restriction must be no more than what is reasonable to protect the former employer’s goodwill. It may be possible to imply restrictions on poaching or soliciting in an employment contract in some circumstances.

Legitimate Restrictions

The restrictions must be tailored to the interest to be protected. A wide obligation prohibiting all solicitations may be too broad and therefore be void. A clause may have the effect of being a restriction even though it may not at first appear to be so.

Any restriction must be reasonable in the scope of the activities restricted, the duration and geographical extent.  There is no hard and fast rule regarding duration. Six months to a years is often said to be the maximum which might be deemed reasonable.  If the restriction is longer than that court deems reasonable, then it may be struck down as entirely invalid.

If the restriction is found unreasonable, the court will not rewrite it. Employment contracts sometimes state that if a restrictive clause is partly void, it is to be enforced only in so far as not void. The offending part is to be “severed”.  The courts only enforce the remaining part of the clause if it can stand alone. The remaining part must make sense without radically affecting the contract.

Sometimes the clause seeks to provide that if a clause is void, the court rewrites it so that it is reasonable. Generally, the courts are not in favour of these clauses.

Injunctions

An employer may seek an injunction to enforce restrictive terms in an employment contract or to protect trade secrets or confidential information. In many cases, the former employer will wish to take pre-emptive action before significant damage is done. A pre-trial injunction which may be available at short notice, is often sought. The rules in relation to pre-trial injunctions differ to those that apply to the grant of an permanent injunction after a full hearing. See our Guide in relation to court procedures.

In the case of an application for a pre-trial injunction, the court only asks if there is a fair case to be tried. It them decides where the so called “balance of convenience” lies. This focuses on whether irredeemable damage, that cannot be later compensated, may occur.  The person seeking the injunction must give an undertaking to compensate the other party if he ultimately looses after a full hearing.

In these circumstances, injunctions may be  given on the basis that there is an arguable case that the employer’s proprietary interests are at risk. However, often the full case does not proceed (which may take several years to come to trial) may never occur. In this case, the pre-trial injunction may end up being determining the position