An Ecolab employee (Garland) was made redundant in May 2011. He then started work with Karcher Pty Ltd on 18 July 2011, as National Sales Manager selling Windsor floor cleaning equipment; equipment he had also sold while at Ecolab. However not long after Garland had left Ecolab, and before starting at Karcher, Ecolab's distribution contract had been terminated and thus Ecolab no longer traded in Windsor's products.
Ecolab argued that Garland had solicited Ecolab's customers and was in direct competition, thus breaching restraint clauses in the employment contract.
Non-solicitation of customers
The court upheld the non-solicitation of customers restraint.
Non-compete clause void
The court however rejected the non-competition restraint because:
- Ecolab had restructured its business altering the reasonableness of the restraint;
- The ex-employee was terminated for redundancy and did not bring about the situation, rather, Ecolab did;
- Ecolab had told the employee he would not be made redundant;
- When the employee started work, Ecolab had assured him that the restraints would not apply;
- The balance of convenience did not support injunctive relief, as Garland would be forced to find alternative employment again, depriving him of an income; and
- The non-solicitation restraints were enough to protect Ecolab's remaining interests in the customer connection.
Ecolab Pty Limited v Stephen Garland (2011) NSWSC 1095
See: http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/1095.html