Details are beginning to emerge from the recent Supreme Court of Victoria battle between Towers Perrin and Deloittes.
Details are beginning to emerge from the recent Supreme Court of Victoria battle between Towers Perrin and Deloittes.
According to law firm Clayton Utz, the recent decision highlights the risks faced by companies wishing to restrain the activities of former employees following a business restructure.
Workplace relations lawyer Joe Catanzariti, who is a partner in the Clayton Utz’ Sydney office, says the case involved Towers Perrin which planned to terminate its custody consulting team as part of a strategy to restructure the business.
“Before the decision was officially made known to the employees, members of the unit began talking to Deloittes, a rival of Towers Perrin,” Catanzariti says.
“Shortly after the decision was officially announced, the individual members of the unit handed in their resignations and indicated that they were going over to De-loittes.”
Towers Perrin took Deloittes and key members of the team to court seeking dam-ages from Deloittes.
The firm also sought interim orders to restrain Deloittes from contacting clients of Towers Perrin and to prevent the key members of the team from working for De-loittes.
Towers Perrin claimed that the damage it was suffering would be compounded if its key team members were trying to lure clients and potential clients to Deloittes.
“The court rejected most of the Towers Perrin application,” Catanzariti says.
“It was prepared to impose a two-month moratorium on Deloittes, but it com-pletely refused to stop the team members working for Deloittes.”
Catanzariti has identified a number of factors that appear to have been crucial to the Court’s reasoning.
“The fact that Towers Perrin did not have a clear-cut plan for the future of its cus-tody consulting business was very important,” he says. “In fact, the court described the firm’s plan as ‘nebulous’.”
“This made it difficult for Towers Perrin to argue that its future business would be damaged by the defection of the team to Deloittes.
“The Court was also clearly aware that a long-term ban on the team members would have a serious effect on their ongoing employability.”
Catanzariti says the lack of damage to Towers Perrin weighed strongly in the team members’ favour.
“Overall, this decision suggests that clearly detailed business restructuring plans are vital to an employer in a situation like this,” he says.
“It is clear from this case that an employer wanting to restrain ex-employees must be able to demonstrate how their defection will affect its future business.
“Without this information, a Court may well conclude that that the employer is simply trying to make an example of the ex-employees, to discourage its remaining employees from also jumping ship.”
Catanzariti says the situation faced by Towers Perrin is increasingly common in corporate Australia.
“The issues raised in this case will obviously be important in any industry where key employees have specialists skills that can only be maintained by continuous employment in the industry,” he says.
