POTENTIAL problems for employers when an employee branches out on his own and competes with his former employer or joins a competitor were brought into focus by a recent High Court decision.

Mr Justice Barron granted Esat Telcom an interlocutory injunction ordering a former employee not to use, or disclose to anyone, any secret information he had relating to Esat.

As a general rule, in the absence of "a valid restrictive covenant, an employee is free, once his employment has terminated, to join a competitor or to establish a rival business.

It is only natural for an employer to want to minimise risk before he gives in his notice. But the desire to minimise risk should not extend to copying or memorising information which could be regarded as confidential or a trade secret, for use after his departure.

This would be in breach of an employee's duty of fidelity or good faith to his employer, to act in his employer's best interests during his employment, and not to misuse or disclose any confidential information of the employer.

This implied duty of good faith, and fidelity is owed for the duration, of the contract of employment, including the employee's spare time. It ceases, however, when the employment ceases.

An employee is not entitled to make preparations for his future during the hours he is contracted to work for his employer. This would be in clear breach of the term of the employment contract as to hours, and may also be a breach of the implied duty of fidelity.

Of greater relevance to the Esat case, an employee is not permitted to copy or memorise customer information, for use after employment has ended, so as to solicit business. If an employee copies sensitive confidential information of his employer with a view to using that, information to compete against the employer after leaving, he may find himself at the receiving end of "a springboard injunction". This would prevent the employee using that confidential information.

Trade secrets of the employer will be protected even after termination of employment even though there is no express covenant relating to such information. What can be described, as highly confidential information analogous to a trade secret will also be entitled to such protection.

However, what is described as mere confidential information will only be protected during employment and not after, unless either in the springboard type of situation, or where an employer goes to the trouble of securing from his employee an express covenant.

The extent to which such a covenant would be enforceable, however, remains open to doubt, both under common law and under section 4 (1), of the Competition Act, 1991.

The crucial issue is how does one distinguish between each of these three categories highly confidential/trade secret information mere confidential information, and generals skill and knowledge.

The courts have laid down certain general guidelines, but it really depends on the facts of each individual case.

An employer must try to define with sufficient precision the confidential information which he wishes to protect as against ex employees.

Part of the rationale for defining exactly the information the employer is trying to protect is that an injunction, if applied for, must be framed with sufficient precision to enable the person injuncted to know what it is he is prevented from doing.