In a recent case, the Employment Court sounded a warning to employees who resign, and then divert business away to their new employer while still working for their previous employer.
Lynda McGuire owned and operated the California Sun and Beauty Studio. She employed Stacey Wilmshurst as a beautician.
Business did not prosper and after a while Ms McGuire put Ms Wilmshurst on commission instead of an hourly rate. On 23 April 1996, Ms Wilmshurst accepted employment elsewhere commencing the
following Monday. She did not tell Ms McGuire about this. The next day, Ms McGuire went to lunch with some business acquaintances. One
mentioned that she had tried to make an appointment for the coming Friday, but was told that the shop would be closed. This surprised Ms McGuire. Although Thursday was ANZAC day, she had arranged for Ms Wilmshurst to open the shop and work the
following day (Friday). One of the other women present said in that case she would ring for an appointment and went away to do so. On returning, she reported to Ms McGuire that she had been
unable to make an appointment because Ms Wilmshurst was leaving and going to work for another establishment. She also reported that Ms Wilmshurst had offered her an appointment with her new employer.
Incensed by this information, Ms McGuire returned to her Beauty Studio and sacked Ms Wilmshurst in an angry scene witnessed by others who were present. She did so
without stopping to pay Ms Wilmshurst her final pay, including holiday pay. Ms Wilmshurst brought a personal grievance and a wages claim against Ms McGuire
in the Employment Tribunal. In a bizarre twist Ms McGuire (the employer) retaliated by filing a personal grievance against Ms Wilmshurst (the employee). The Tribunal later dismissed this claim.
Ms Wilmshurst’s wage claim succeeded. So did her personal grievance, the Tribunal holding that Ms McGuire had made no attempt whatsoever to follow a fair process.
The Tribunal was prepared to award Ms Wilmshurst $1000, but reduced this to zero because of her actions in diverting clients away to her new employer.
It emerged in evidence that Ms McGuire’s lunch companions were by no means the only ones to be diverted away. There were others as well.
Ms Wilmshurst appealed to the Employment Court. On appeal, she criticised the $1000 compensation awarded to her as "meagre". She also argued that reducing this award to zero was out of all proportion to what she had done and the harm she had caused.
The Employment Court disagreed.
| "... that [Ms Wilmshurst’s] activities deprived [Ms
McGuire] of only a handful of her hundreds of clients betrays a misunderstanding of the basic solemn duty, invariably strictly enforced, by which every employee is bound
not to engage in conduct that is hostile to her employer’s business, not even to a slight degree ... [It is also not] a valid answer that a customer may have made the initial approach" Chief Judge Goddard said.
Chief Judge Goddard went on to say that Ms Wilmshurst’s personal grievance case "should never have seen the light of an adjudication day". | |
This case shows that the Employment Court and Tribunal will have little sympathy for employees who engage in conduct that is hostile towards their employer’s
business. Employees who engage in such conduct risk dismissal. They may also be sued for damages for any losses that they cause to their employer, and have injunctions made against them.
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