No duty to disclose intention to compete

June 27, 2017, By

The Court in MPT Group v Peel considered whether employees were under a duty to disclose to their current employer, their intentions to compete with their current employer’s business after the termination of their employment. In this case, two employees intended to set up a company in competition with their employer’s business following the termination of their employment and also after the expiry of their contractual restrictive covenants. The current employer, MPT Group Limited, questioned the two employees about their future intentions when the two employees handed in their notices to resign. However, both employees lied about their intentions and did not disclose the fact that they fully intended to set up in competition with MPT Group.

On discovering the two employees’ intentions, MPT Group sought an injunction to stop the employees competing with its business. Its application was based on the employees’ misuse of confidential information and it also sought to rely upon what it suggested to be the employees’ breach of the duty to answer questions truthfully.

The judge in this case did agree that there was a general duty to answer questions truthfully however this did not extend to a contractual obligation on employees to disclose their own confidential plans to set up in competition. It is worth noting that although fairly senior, these employees were not sufficiently senior to owe fiduciary duties to MPT Group. Furthermore, the case concerned employees intending to set up after the expiry of their restrictive covenants etc. rather than whilst these restrictive covenants were still “live”.