A recent dispute between one of Australia’s leading sports agencies and two of it's ex-employees is a reminder to employers about the importance of implementing processes to protect confidential information, including that of their customers and clients.
Ultra Management Sports, an agency that represents many elite rugby league and rugby union players, commenced proceedings in the Federal Court of Australia, claiming that two of it's player agents amended player/agent contracts without authorisation. The alleged amendments included the insertion of clauses which allowed those players to leave the agency if and when those agents eventually left.
Ultra is claiming that the contracts were amended following an update to the NRL player agent contract policy, which included a clause in new contracts that would tie clients to their agents, and not the company that the agents worked for. The agents allegedly amended the existing contracts of 16 players despite the policy stating that existing contracts were not affected by the policy change and they would simply run their course. The agents subsequently created their own sports agency and a number of their clients then joined that new agency.
Ultra is seeking damages resulting from the conduct of the agents, which it claims amounted to an illegal poaching of clients and a failure to act in the best interests of their then-employer.
A 5-day hearing of the matter in the Federal Court of Australia recently ended on 8 October 2019, with the Court reserving its decision.
Whilst we await the outcome, this matter is a prime example of why employers should ensure that they have adequation protections in place to regulate what an employee can and cannot do during their employment, including authorisation to amend contracts with clients.
Employers should also ensure that their employment contracts appropriately deal with what an employee can and cannot do with the employer’s confidential information, and that of its customers and clients, both during and after employment. The more senior an employee is in the business, the more stringent those protections or limitations should be.
It is also an important lesson for athletes to ensure that they fully understand what their rights and obligations will be under any contract, and that their management team is acting in their best interests. Managing contracts can be complex as there are a number of things to consider, such as contracts with clubs, sporting organisations, third party sponsors and even contracts with player agents themselves.
It is therefore crucial that athletes understand what their obligations are and that they trust the advisors they partner with to act in their best interests.
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