He dated the deal for the day after his last day, then said a director had released him
An engineer signed with his employer's major client a day before resigning. A Hong Kong court found the move breached his duty of fidelity.
The Court of First Instance handed down its judgment on September 9, 2026. The case was brought by two related companies, N.P. King (Hong Kong) Ltd and Purdon King (International) Ltd, against a former employee and his company.
The engineer had worked for the companies for about 15 years and was in charge of their work on the client's dealings with its suppliers in China.
In June 2021, he set up his own company. Between then and early September, he designed its logo and applied for a domain name and bank accounts.
On September 9, 2021, he signed a management contract with the client on the company's behalf. Below his signature, he wrote October 11, 2021.
The next day, he handed in a month's notice. Around October 4, the client gave the companies six months' notice to end their own contract. The engineer's last day was October 10.
His case was that the client had approached him first, and that a director had verbally released him from the restrictions in his employment contract. The court found he did tell the director he planned to work with the client, but did not ask whether he was allowed to. It was not satisfied the release was given, and said the words he described were “self-contradictory and incoherent”.
That left the contract. The duty of fidelity is an employee's implied duty of good faith toward the employer, and it includes not taking part in a competing business while still employed. The court found that signing went beyond getting ready to compete, which the law allows. The contract committed the client and his company to start on October 11, and its services substantially overlapped with those in the companies' own contract. The court found the breach led the client and the suppliers to end their relationships with the companies.
The court ordered him to pay Purdon King HK$232,180.10. Most of that, HK$227,180.10, covered profit the companies lost over the six months and seven days after the client's termination took effect on April 3, 2022. The court reasoned that a replacement would have needed months to gather updated pricing and get trained, which would have kept the client with the companies until October 9, 2022.
The other HK$5,000 was nominal damages, a token sum awarded where no actual loss was shown, for breaching clauses on soliciting the companies' customers and competing. The court found he circulated price lists for similar products after leaving and approached three of the companies' customers.
The court did not accept several other claims. It was not satisfied he owed fiduciary duties, a legal duty of trust that turns on holding power or discretion for the employer, noting the companies had not explained what power or discretion he held. It was not satisfied the price and customer information was confidential, noting the companies had not explained why. It was also not satisfied he removed or destroyed invoices or other documents the companies said had gone missing. The companies' claims against his company were dismissed, as was his counterclaim.
The court said it made no difference if the client had started the talks. The essence of the duty, it wrote, is not about who initiates but about “a current employee not permitted to enter into competition with the employer”.
