A company that provides computer support services provided services to Coca Cola. An employee of the company set up a competing business while working and left the company taking Coca-Cola as a customer. The company sought to enforce the non-compete clause in the employment agreement in which the employee undertook not to engage with company clients for 3 years of the termination of employment, and set liquidated compensation in the amount of ILS 100,000. The company also sought compensation for the fact that the employee did not register working hours, causing loss of income to the company. The employee filed a claim against a company manager for a slandering message the manager sent by e-mail and fax to Coca-Cola upon receiving Coca-Cola's notice of termination of the contract with the company.
The Court held that the non-compete obligation is extreme and will not be enforced but the employee violated the duty to act in good faith when he established a competing business while working and even promoted it during work hours and this is a breach of fiduciary duty - an independent cause for compensation even without a non-compete agreement. The Court thus ordered the employee to compensate the company in the amount of 8 months of compensation from the customer he has taken. With regard to compensation for non-registration of work hours, an employee cannot be ordered to compensate for this in lack of a provision to that end in the employment agreement. The Court held the company manager personally liable to compensate the employee for defamation despite the fact that the fax and mail were sent within his position as a manager of the company because in libel suits an employee may also personally sue the person who committed the wrong against him.