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Sunday, 15 April 2012

Unfair Competition

Q: Can an employee leave my company and start a similar company next door?

A: So you hired someone, trained him/her in every aspect of your business and the industry, then one day, that person quits...  and then one week later, that person opens a similar business next door.

It seems unfair, but generally, nothing can be done about it because competition is seen as an imperative part of a democratic society.

An employer cannot sue the employee unless the new business acts in a manner that is contrary to the
Protection Against Unfair Competition Act 1996, as amended

The Act states that the competition must not:
#1 - Confuse customers with the existing company; similar name, logo, appearance or presentation.

#2 - Damage the reputation of the existing company

#3 - Mislead the public about the existing company's products or services

#4 - Discredit the existing company's products or services, usually through advertising

#5 - Use of secret information, such as the copying of client details to take to the new company.

To avoid this from happening, employers can include a non-Solicitation/non-Compete clause in the employment contract, so that they can have some legal recourse.