Employees breach good faith obligations towards their employer.

Legal action was recently taken by E-Lighting against two former employees over allegations that during their employment with the company, they took orders and sold products via a company Limelight Design belonging to one of them. 

One of the employees who was the owner of Limelight Design was ordered to pay $10,000 to her former employer after setting up a competing business while she was still employed.

E-Lighting’s CEO Ross Peden claimed that Gabrielle Dickens and her colleague, Dax Peter, had decided to go into business together with the intention of representing suppliers including E-Lighting’s key contract, Hunza Productions who were responsible at the time for 50% of the company’s revenue.

Peden claimed that his former employees took advantage of business research, access to confidential information and relationships developed while employed by E-Lighting.

Peden also alleged that Hunza had aided and abetted the pair’s breach of their employment obligations when terminating its original contract in favour of a new one with Limelight.

Dickens and Peter denied breaching good faith towards their former employer by using business relationships formed during their employment with E-Lighting to boost their own business.

Peden admitted he knew about Limelight while the pair were still his employees, but said he thought it was a hobby project.

He also stated he had agreed Dickens could have products at wholesale rates but only on the condition that they were not sold to his customers. It was only after Dickens’ resignation that he realised she had been selling the products to E-Lighting customers.

Dickens responded claiming that E-Lighting was failing to provide the customers with the products they wanted and that she had also been working long hours at the company without being compensated.

ERA authority member Eleanor Robinson found that Dickens’ actions were unacceptable.  Customers had been told that Dickens worked for both companies, and she had blurred the line between them by making sales during working hours for both companies and using her E-Lighting car and accounts for personal business.

“I do not find it credible that an employer would agree to an employee acting in such a way and to such an extent during the course of his or her employment ... I determine that these are actions which represent a serious breach of the core obligations of an employee,” Robinson ruled.

Robinson also added that although there was evidence Dickens used E-Lighting information and contacts for her own benefit, there was no evidence that Peter had done so.
Dickens and Hunza were ordered to pay E-Lighting $10,000, and Peter was ordered to pay $3000.