Andrew Stafford QC and Jeffrey Bacon win latest case on preparing to compete

04.02.2012

What an outgoing employee can legitimately do by way of preparation for competition is a continuing source of controversy.  The law has been clarified in Customer Systems v Ranson, in which Andrew Stafford QC and Jeffrey Bacon acted for the departing employee.

During his notice period, Mr. Ranson developed business plans for a start-up company which he was planning to operate once he was free to do so.  Sir Raymond Jack held that these plans did not amount to a breach of the duty of fidelity or a breach of fiduciary duty. 

Moreover, the judge held that information concerning the new business passed on by Mr. Ranson after the end of employment to an ex-colleague when trying to persuade the ex-colleague to join his new venture did not have to be disclosed by the ex-colleague to the employer.  The ex-colleague was entitled to discuss possible future employment without having to report back to his existing employer what he had learned.

However, meeting a potential customer a few days before the end of employment was a held to be a breach.  So too was entering a forward contract to be carried out after the end of employment.

This is an important addition to the growing jurisprudence on employee’s contractual and fiduciary duties.  This area of law is discussed in detail in “Fiduciary Duties: Directors & Employees” written by Andrew and Stuart Ritchie, and is an area of law at the forefront of Andrew’s and Jeff’s practices