HP-Oracle suit highlights UK employment law issues

A courtroom wrangle in the US between computing giants Oracle and Hewlett Packard (HP) is being monitored closely by employment law specialists in the UK to see what legal precedent – if any – it sets.

The suit arose when former HP CEO Mark Hurd was appointed to Oracle's board shortly after leaving HP amid allegations of inappropriate conduct. Within a day of his appointment, HP lodged a lawsuit in California to try to prevent it, arguing that it would make the disclosure of HP trade secrets inevitable.

Among US states, California is regarded as the one least likely to interfere in a person's right to change jobs. Many US observers believe that HP’s action will only succeed if they prove Hurd knows of trade secrets relating to specific technical know-how – as opposed to business plans and structures, of which he is, as former CEO, inevitably aware.

In the UK, however, despite regarding restrictions of an individual’s employment opportunities as an unlawful restraint of trade, a court would likely uphold restrictive covenants contained in an employment contract. This is providing the court is satisfied that those restrictions are crucial to the reasonable protection of an employer’s business interests.

The effect of the case in the UK is likely to be an important legal reminder: UK employers must make sure key employees are subject to appropriate and legally enforceable contractual provisions that will limit their competitive activities after ending their employment.