A Wairarapa woman has been ordered to pay more than $40,000 to her former employer for breach of contract and an additional $15,000 in penalties.
A recent decision of the Employment Relations Authority [ERA] in Wellington found Adrienne Dempsey had breached employment obligations she owed accounting firm Moore Markhams in relation to her employment in its Masterton office.
She was ordered to pay $40.090 to Moore Markhams in damages, and a penalty of $15,000.00 half payable to Moore Markhams and half to the Crown.
Dempsey was employed by a predecessor to Moore Markhams, Moore Stephens, as an audit manager in Masterton. She was the firm’s sole employee in the region, tasked with promoting and growing the Wairarapa practice. Her employment agreement contained provisions that reflected her role as the firm’s only representative in the region, and the arrangement continued with Moore Markhams.
In particular, she was required to declare a conflict of interest and was restricted from engaging in a competing business without her employer’s written permission.
“Employees may not, whilst in the employ of the Employer, invest personal monies, obtain an interest in or establish any other business that may be deemed to be in competition with the Employer or its principals, without the written permission of the Employer,” the clause said.
The agreement also prohibited doing private work either on or off the employer’s premises, or using the employer’s equipment without written permission.
Dempsey resigned from the firm in June 2020. However, Moore Markhams started investigating Dempsey’s activities and discovered evidence she had been in discussions with clients, apparently with a view to starting her own accounting business.
Moore Markhams started proceedings against Dempsey in August. They discovered Dempsey had registered a domain name, auditplus.nz, as early as May 21, 2020. Business cards had also been printed, and a LinkedIn page established.
The ERA found it was “obvious” Dempsey had breached her employment obligations, in particular the requirement not to establish or be involved with a competing business.
“Moves were afoot to establish Auditplus prior to either the tendering of her resignation or Moore Markhams gaining knowledge of her actions,” the ERA said.
“The Auditplus domain name was registered on 21 May 2020, and while she tries to distance herself from this by saying her husband did it, I reject that given Ms Dempsey’s acceptance it was on her instruction.”
Dempsey registered the competing company on 22 June 2020 and signed both the director and shareholder consents on 17 June. She was an employee of Moore Markhams at this time and accepted she neither advised them of her actions nor sought their consent.
“That Auditplus would act in competition is also obvious given it operated in the same industry and, as events transpired, took various clients/contracts from Moore Markhams,” the ERA found.
“To accept approaches from potential clients and enter into arrangements to take their clientele from Moore Markhams while still employed must constitute a severe breach of the duty of trust and confidence. Similarly, I consider that to do so in secrecy when there exists a contractual obligation to declare such an interest is a breach of trust and confidence and the duty of fidelity. Ms Dempsey’s actions also constituted a breach of various express contractual obligations,” the ERA decision said.
Dempsey was ordered to pay the damages and penalties to Moore Markhams before the end of June. Costs were reserved.
Not often Employer has a win.
Must have been a pretty bad case . For this result.