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Law: Setting up in competition – unlawful action by employees

A recent case (Crowson Fabrics Ltd v Rider and others) set out useful guidance where ex-employees have deliberately used their present employment to set up in competition.

Mr Rider had the position of product and distribution director.

There were no express contract terms regarding termination of employment or the use of company information.

Another manger also confirmed he would be leaving.

A few months later the previous employer issued an application in the High Court to restrain the two employees from using information taken from the employer.

Among the acts complained of were:


  • Use of computers to draw up sales projections for largest customers on popular lines.
  • Diversion of emails to the new company and then using emailing to attract customers for the new business.
  • Solicitation of two sales agents to obtain business.
  • Copying confidential and non-confidential information.

    The ex-employees argued that all they were doing was using personal knowledge.

    In regard to the non-confidential information it was held a company is entitled to protect such information from illegitimate use.

    Hence deliberate copying or even memorising can be considered illegitimate.

    It is always preferable to put duties and obligations in writing in a contract to avoid ambiguity.

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