Catastrophe Concepts - Karens Release - Article Example

Employees are the key asset of every company; however they have access to trade secrets and confidential information. Apart from this they even have enough influence on other employees that they can cause them to leave the company and work for a competitor. Thus every company should ensure that they are safe guarded against issues. Karen’s release is legal under the doctrine of employment at-will, providing she was an employee. Thus Catastrophe Concepts can issue a termination letter to Karen as she has an Employment-at-will status. Thus only receiving an appointment letter and a contract does not provide employees with job security, and an employee can be terminated within a minute without even having any reason at all (Van Buren & Greenwood 2008). On the other hand, if Karen was a contractor, then Catastrophe Concepts would have broken the employment contract which would be illegal. Catastrophe Concepts can not prohibit Karen from passing their trade secret or misusing confidential information to someone else as a result of her employment. Also, they cannot prohibit her to continue even after the employment has come to an end and if the employee had breached this duty by disclosing employer trade secrets, the employer has several remedies. Catastrophe Concepts should have mentioned in Karen’s contract at the time of employment that all information was confidential and should not be used else where. They should made her sign another contract stating the following. I acknowledge that all Confidential Information, whether or not in writing and whether or not labelled or identified as confidential or proprietary, is and will remain the exclusive property of the Company or the third party providing such information to me or the Company. Nevertheless, there is no implied term which forces the duty on Karen not to disclose any information after the termination of the employment is very restricted. So, it is not possible to restrain Karen from disclosing to a future employer a special method of organization, as opposed to a secret process, for the employee and employer both have to know the difference between objective knowledge, such as trade secrets and lists of customers, which are part of the property of the employer, as well as subjective knowledge which the employee has gained through his own experience, like his knowledge regarding the market or industry (Callahan 1990). Accordingly, the rationale of these previous decisions was not to support either one, for example, the employer or the employee, but was focused on protecting research and development and to eliminate industrial espionage (Cross 1991). Therefore if a trade secret, or a secret course of action, is present in the organization, the employer is at liberty to have his employees sign a contract not to give that information to a future employer however in this case the employer did not do this. However, it should also be kept in mind that if Karen discloses confidential information in good faith then there are a number of rules which may protect Karen as she will be disclosing the information in good faith the new employer. Section 43 G ERA 1996 is one such Act which may free Karen of any restrictions on her regarding protected disclosure as is it based on limited circumstances. However, the Act will only be effective if Karen acts in good faith, acts reasonably, and does not disclose information for personal reasons, reasonably consider the information or any claim regarding it to be valid (Lewis 2001). In another words, the employee can make use of his experience and his individual skills or "know-how" which was gained during her stay at Catastrophe Concepts. In this case the contract seems to be not enforceable in either case because it does not have a legitimate interest stated. Basically, Karen is free to engage in a competition with her former employer, but this is constrained by two exceptions. Firstly, Karen is in breach of her duty of fidelity, that she is not allowed to compete, while still employed. In the case of Wessex Dairies Ltd v Smith it was held that a milk rounds man, who canvassed his employer's customers on his last day of services to transfer their custom to him from the following day, was in breach of this duty (Fast 1993, p.15). Secondly, when there is an express clause in the contract restraining competition by the employee when the employment has terminated. Consequently, an employer can not protect himself against competition by express stipulation. But he can protect his trade secret even without the need for an express clause. But the employer did not express any such clause. Karen must work in the best welfare of the employer's business. This duty will be implied into the contract of employment and maybe spelled out by any express term. An express term maybe pursues to protect the employer's business even after the employment ends by restricting the employees from competition. For instance, when the employee leaves the employment, and starts to work in the same kind of work using his former employer trade secrets. However, each of these duties has it limits. For example, while an employee may be restrained from disclosing confidential information in nature of 'trade secrets', he may take away with him his individual skill and knowledge when he leaves employment. Furthermore, the duty not to work in competition with the employer requires the employee to refrain from responding to the approaches of customers or soliciting customers or competitors during working hours (Cabrelli 2004). In an employee's spare time, however, if there is no express restriction and the moonlighting activity causes no serious harm or prejudice to the employer, employees remain free to take on such work. In the case of the duty to disclose information about the misconduct of other employees, there is an obvious increase in strictness for those in general management and executive positions but employees are not required to disclose their own defective conduct or breaches of duty. Therefore, if Karen does nothing which is against the clauses of the contract, or gives information to the new employee, in a manner which is harmful to Catastrophe Concepts, it will be considered a breach of the contract and may result in legal action service. Moreover, the judges define the contract of employment as one which involves someone giving orders and someone else obeying them. On the other hand, an employee may disobey any orders which are not lawful and reasonable. He also can reject any orders that entail some additional or exceptional risk (Cava 1990, p.12). An important question may be asked, does the good faith require a person applying for a job to disclose facts about himself which might not help him to get that job? Here the organization can put in the clause that in certain circumstances Karen will have to notify Catastrophe Concepts. If she has any documents left with her regarding information which have an effect on confidentiality of Catastrophe Concepts. In addition, the common law view is that if the employer thinks that the point is so important, he should ask about it from the beginning, and if he does not, he can not blame the employee in the future for failing to notify him about it (Stewart 2008, p.237). But if the employer does ask and received a deliberately false answer, bad faith is of course established. As mentioned before, one of Karen’s most important duties is to protect Catastrophe Concepts proprietary interests. One of the interests in respect of which the employer is entitled to have protection is his trade secrets and confidential information. It is illegal for Karen to lure away other employees from Catastrophe Concepts, even if she tells them to join her when their contract ends with Catastrophe Concepts. In this case if Catastrophe Concepts have made strong business relationships, and Catastrophe Concepts strongly believes that and expects that the employee will stay in his employ for an indefinite period, a lot of laws state that it is illegal for another employee to lure the employee away (Fast, 1990). Nevertheless, this holds true only if other possible employers will not energetically employ this particular employee, as explained earlier (Stewart 2008). Thus other employees like Karen who are not on contract can be legally lured by Karen, unless Catastrophe Concepts issues contracts to all its employees. As is stated above, fiduciaries may not solicit their former employer’s employees to join them in new business ventures. The cases of Corporate Classic Caterers v. Dynapro Systems Inc. (1997) and Alnor Service (p. 8 above), however, held that employees will not be liable for inducing breach of contract where all they have done is offer other employees work, or indicate that work might be available. The courts have stated that this behaviour does not constitute active solicitation (Waston 1999, p.1). By analyzing the case study used in this essay it can be concluded that the confusion and problems Catastrophe Concepts faced regarding Karen is something which a lot of organizations face when that terminates their employees. To avoid such circumstances, organizations should give a complete appointment letter along with a non disclosure agreement to be signed. Apart from this the organization should also enlighten the employee beforehand about their rules regarding luring other employees. If Catastrophe Concepts would have done this before hand then it would have saved them a lot of trouble. References Cabrelli, D 2004, ‘Post-Termination Covenants in the Spotlight Again’, Ind Law J. 33, pp. 167-179. Callahan, ES, ‘Employment at Will: The Relationship Between Societal Expectations and the Law’, American Business Law Journal, vol. 28, p.455. Cava, A 1990, ‘Trade Secrets and Covenants Not to Compete: Beware of Winning the Battle but Losing the War’, Journal of Small Business Management, Vol. 28, p12. Cross, JT 1991, ‘Protecting Confidential Information under the Criminal Law of Theft and Fraud’, Oxford Journal of Legal Studies, vol. 11, no. 2, pp. 264-272. Fast, SL 1993, ‘Breach of Employee Confidentiality: Moving toward a Common-Law Tort Remedy’, The University of Pennsylvania Law Review, p. 15. Van Buren J. Harry & Greenwood Michelle (2008). Enhancing Employee Voice: Are Voluntary Employer–Employee Partnerships Enough? Heidelberg, Allemagne Journal of Business Ethics 81 (1). Lewis, DB. 2001, ‘Whistle blowing at work: on what principles should legislation be based?’ Industrial Law Journal, vol. 30, no. 2, pp. 169-193. Stewart, A 2008, Stewart’s Guide to Employment Law, Sydney Publisher Federation Press. Watson, MSF 1999, ‘The Duties of Departing Employees’, viewed 25 July 2009, http://www.gowlings.com/resources/publications.asp?pubid=751. Read More