Non-Party Employer Made to Pay Costs in Restraint Litigation

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On 1 May 2013, the Supreme Court of New South Wales handed down judgment in HRX Pty Ltd v Scott [2013] NSWSC 451 (HRX v Scott). In doing so, the Court sent a clear message to employers about the risks associated with "poaching" employees from competitors. The Court imposed an order for costs against the new employer which had initially funded the employee's defence. The claim was brought by the employee's previous employer against its former employee due to an alleged breach of the employee's restraint of trade obligations.

The Facts -

HRX Pty Ltd (HRX), the former employer, and Talent2 Pty Ltd (Talent2), the new employer, are both providers of human resources consultancy services in direct competition with each other. Mr Scott, the defendant, was employed by HRX until 31 January 2012, when he resigned and began working for Talent2.

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