An employee developed in his free time a project with a partner and actually offered it to the employer who refused the opportunity. The employee was called for a hearing because of a clause in the employment agreement forbidding any other activity without the written agreement of the employer and thereafter was terminated and his computer, containing also private data, was taken from his room. Later his superior even told other employees that the employee was terminated for breach of fiduciary obligations.
The Court held that the employment termination was lawful and also rejected the claim for defamation due to the exposure of the reason for termination. Although the employment agreement prohibited any other occupation for pay or without payment, it is necessary to distinguish between a situation where an employee takes a "trade secret" of the employer to work for a competitor or a competing business of his own, and a situation where an employee develops an idea for a future occupation. An employer's desire to prevent employees from competing with it is not a "legitimate interest" that justifies limiting their freedom of occupation because it is contrary to public policy. However, the evidence shows that the employee used the name of the employer to promote his private project and therefore was in a breach of fiduciary obligations that justified dismissal.
The employer was entitled to take the employee's computer, but was not entitled to penetrate it. Here it was not proven that the computer was penetrated or that the employer entered the employee's private mail, but only that the employer changed the password in order to prevent the employee from accessing the material, and therefore the Court rejected the claim for infringement of privacy. Moreover, the Court held that the provisions of the Defamation Law cannot lead to a situation under which, to prevent the publication of defamation, it will be necessary to lie or not to tell the truth. Here, the supervisor said things based on full belief of their truth and to describe a situation that was created and not in order to humiliate or degrade the employee and thus no liability for defamation exists.