Court rules against workers who breached 'core obligations of an employee'

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A woman has been ordered to pay $10,000 to her former employer after she set up a competing business while she was still employed.

E-Lighting’s CEO Ross Peden took legal action against two former employees over allegations that during their employment with the company, they took orders and sold products via her own company, Limelight Design.

Peden claimed that Gabrielle Dickens and her colleague, Dax Peter, had arranged to go into business together with the intention of representing suppliers – including E-Lighting’s key contract, Hunza Productions.

Hunza was responsible at the time for half of the company’s revenue.

Peden argued that his former employees had taken advantage of business preparations they made while employed by E-Lighting.

Access to confidential information and relationships developed through E-Lighting were used for their own gain, he said.

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

Dickens and Peter denied that they had breached good faith towards their former employer, as well as using business relationships formed during their employment there to boost their own business.

While Peden admitted he knew about Limelight while the pair were still his employees, he said he had been under the impression that it was a hobby project.

He also told the tribunal that he had agreed Dickens could have products at wholesale rates on the condition that they were not sold to his customers.

It was after Dickens’ resignation, Peden said, that he realised she had been selling the products to E-Lighting customers.

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

ERA authority member Eleanor Robinson disagreed with the allegation that Dickens and Peter had breached a restraint of trade.

However, she found that there had been a line crossed regarding Dickens’ actions that benefited her former employer and her own company – customers had been told that

Dickens worked for both companies, and she had blurred that line 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.

However, she added that although there was evidence Dickens used her E-Lighting connections for her own benefit, there was no evidence that Peter did so.
Dickens and Hunza were ordered to pay E-Lighting $10,000, while Peter was ordered to pay the company $3000.

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