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Disclosure of the intention to compete with employer?

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The Chancery Division in the case of MPT Group v Peel held it is probably not necessary for employees to disclose their intention to compete with their employer.

In this case two fairly senior employees planned to set up a new company in competition with their employer once their restrictive covenants had expired post employment. The employees handed in their resignation and were not honest about their future work intentions when questioned by their employer in this regard. The employer sought an injunction on misuse of confidential information and a breach of the duty to answer questions truthfully.

The judge held that although there was a general duty to answer questions truthfully he was ‘reluctant to hold’ that a departing employee is under any contractual obligation to disclose his own confidential plans to set up in lawful competition.

It is, however, worth noting that a different conclusion may have been reached should the employees have been senior enough to owe fiduciary duties to the employer.

Written by
Edward Aston
13th June 2017