Employsure Ltd v McMurchy

In the case of Employsure Ltd v McMurchy, the respondent, Mr McMurchy, had been employed by the appellant, Employsure Ltd, under an employment contract which included a non-solicitation clause. After giving notice of termination, Mr McMurchy commenced employment with a competitor. Employsure Ltd sought relief for the alleged breach of the non-solicitation clause, inducement of breach of contract, and fiduciary duty breaches. The case was heard in the Supreme Court of New South Wales.

The primary legal issues the court needed to address included whether the letters of variation served by the employer had the effect of reinstating an earlier version of the employment contract, the intention behind the parties' agreement to correct an obvious error in the contract, and the validity of the non-solicitation clause. The court also had to determine whether the employer had terminated the contract in a manner consistent with the contract terms, and if Mr McMurchy had breached his non-solicitation clause by aiding the recruitment of another employee with a competitor.

The court found that the letters of variation did not have the effect of reinstating the previous version of the employment contract, as the reference to the earlier version was an obvious error. The court discerned the intention of the parties to correct this error and held that the non-solicitation clause was valid and enforceable. It was determined that the employer had not terminated the contract properly, but Mr McMurchy had breached the non-solicitation clause by assisting in the recruitment of another employee with a competitor. The court also found that Mr McMurchy had breached his fiduciary duties by taking up employment with a competitor while still employed by Employsure Ltd, and that he had induced breach of contract.

The final orders of the court included a declaration that Mr McMurchy had breached his non-solicitation clause and fiduciary duties, an injunction restraining him from competing with Employsure Ltd, and an order for damages to be assessed. The court also ordered that the non-solicitation clause and other restraints in the contract were valid and enforceable, subject to the provisions of the Restraints of Trade Act 1976 (NSW).