Commercial Law - Employment Law - Interpretation of Regards to Employment Contract


Employment law firm
The situation of Helmet Integrated Systems Ltd v Tunnard yet others [2006], involved a dispute over what actions could possibly be allowed underneath the terms of an employment contract. The claimant ("HISL") produced and sold protective clothing. In 1993, it commissioned a fresh helmet design that was successfully marketed especially towards the London Fire Brigade. The defendant was obviously a senior salesman with the claimant.

Employment law firm
During the claimant's employment, the defendant had the thought for a new modular helmet. He believed that his employers are not interested in developing a new helmet, particularly about the European market, where he perceived there to become a gap for this type of product to get a foothold.

Between September 2001 as well as the 28th of February 2002, the defendant took a number of steps to safely move his idea. He obtained some funding and arranged for designers to prepare initial drawings of his concept. He handed in his notice of resignation on the 1st of February 2002 and worked until the end of his notice period until he left around the 28th of February.

The defendant incorporated Modular Helmet Systems Ltd ("MHSL") 8 weeks after his departure from your claimant. Shortly thereafter, an adversary company to HISL, Lion Apparel Inc ("Lion") committed to a big part shareholding in MHSL. The claimant brought claims alleging how the defendant had acted in breach of his duty of fidelity in developing a safety helmet which will be in competition with HISL's safety helmet, together acted in breach of his fiduciary duties in neglecting to report his activities while still under HISL's contract of employment.

Those claims were rejected by the judge inside the patents county court. He determined that acts of preparation before departure were not actionable and that there was no breach of duty of fine faith or fidelity by the employee. He held that the employee was allowed to decide to set up a business competing along with his employer which the preliminary steps come to achieve this were permitted. Younger crowd figured there was no breach associated with a fiduciary duty because such an obligation must be confined to his duty as a sales representative.

The claimant appealed using this decision. On appeal the claimant relied on the fact the defendant's printed contract of employment so long as it absolutely was his duty to advise his employer about the activities of competitors and their pricing structures. They argued he was, therefore, within a duty to report such activities if they were undertaken by way of a competitor or on his own in their intend to contend with his former employer.

The appeal was dismissed. It absolutely was held:

- Underneath the circumstances, even though the defendant's activities could have amounted to competitor activity if undertaken by a competitor (and the man therefore might have owed a fiduciary obligation not to misuse information regarding such activity for their own benefit or for the benefit of someone other than the claimant), it didn't imply that he was under any obligation to tell HISL of his own activities.

- The words with the job specification failed to restrict the defendant's freedom to organize for competition on leaving. He was employed like a salesman not really a designer also it was never in contemplation of either party that he would develop a helmet. Clear words were necessary to restrict the standard freedom of your employee who was simply quitting his employment and setting up in competition to his former employer, that your defendant's job specification failed to do.

- He was under no relevant fiduciary duty for the claimant. The defendant owed no fiduciary obligations in relation to the development of a preliminary concept to get a new helmet. Therefore he wasn't in breach of the such obligation by seeking to raise funds for such a project while still in employment. The defendant was working on his idea as part of his own serious amounts of because of this the idea developed belonged to him.