Competing business move costs worker $10K

Two workers who resigned from a lighting company, then set up a rival company with a main supplier have been ordered by the ERA to pay thousands in compensation. Photo / iStock

A lighting company has successfully taken two former employees to task for setting up a competing company and then taking a supplier with them.

E-Lighting took former employees Gabrielle Dickens and Dax Peter to the Employment Relations Authority after they resigned from the company to start their own venture, and a major supplier cut ties with the company.

Chief executive Ross Peden told the Authority that while Dickens was still employed she took orders and made sales through a personal company, Limelight Design Limited (LDL).

Dickens and co-worker Peter had arranged to set up a business together and take the contract with Hunza Production Ltd, which was E-Lighting's key supplier, Peden said.

Both ex-employees denied breaching their good faith duty to E-Lighting and told the Authority they hadn't used business relationships formed through E-Lighting to springboard their own business opportunities.

Peden said Hunza aided and abetted Dickens and Peter breaching their employment obligations, but Hunza told the Authority it denied doing so.

The Authority heard evidence that customers were told Dickens worked for both E-Lighting and LDL and she had made sales for LDL during work hours at E-Lighting.

She used E-Lighting's car, email and travel account for LDL business and the Authority found that by doing so, she had deprived E-Lighting of profits.

Both Peter and Dickens resigned from E-Lighting on the same date in October 2014, and had told Hunza employees they would be leaving E-Lighting and starting their own venture. Hunza then gave notice it would end its supply arrangement with E-Lighting.

ERA Authority Member Eleanor Robinson found Dickens' actions represented "a serious breach of the core obligations of an employee".

Dickens and Peter did not breach a restraint of trade agreement, but it was clear the line between Dickens' actions benefiting E-Lighting and LDL had been blurred, Robinson said.

Dickens used her E-Lighting connections for her own gain, but Robinson said there was no evidence Peter had done the same.

Robinson made an order for Dickens to pay E-Lighting $10,000, Peter was ordered to pay $3000 and Hunza was ordered to pay $10,000. The Authority would now be investigating how much damages, if any, E-Lighting was entitled to.

View the ERA decision here: