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I have a friend who took a former employer to tribunal, employer preferred to pay him early settlement compensation, signed mutual NDA not allowing any party (including employees) to disclose the existence of that legal dispute and later (unsurprisingly) went out of business.

Now my friend has been told by an interviewer in the company he applied to that they contacted his former colleague and he disclosed the existence of dispute. While my friend had a very good reason to take his former employer to court this is not what his prospective employer would be glad to learn.

Is there any legal way to stop former colleagues who were aware of the dispute from spreading this information (not necessarily libellous but still unwanted) to any new prospective employers, especially informally?

If there is no legal remedy then it appears that the golden rule is no matter how wrong your employer is, never take them to court if you want another job..

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  • To confirm, the former colleague was an employee of the former employer and therefore subject to the terms of the mutual NDA? – Jason Aller Jan 5 '16 at 17:13
  • Seems like you'd need to have the prospective employer give you the name of the reference, and if they refuse, sue John Doe or something and compel the employer to provide the name of the reference during discovery. You'd then name the defendant and sue for whatever damages you're entitled to. – Patrick87 Jan 5 '16 at 18:14
  • @Patrick87 I think the question is rather whether the former colleague is bound by the non-disclosure agreement, in light of the fact that he is no longer an employee of the company and the fact that the company is out of business. – phoog Jan 5 '16 at 18:45
  • @ Jason Aller. Correct. – Prohibited Thoughts Jan 5 '16 at 21:20
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I very much doubt that you have any legal way to stop this. That employee is very unlikely to have signed an NDA and is unlikely to have any legal obligations towards you.

His only risk is that the bankrupt, out of business company might sue him. Which is very unlikely to happen. And unlikely to be successful. You'd have to first sue the bankrupt company, somehow get money out of them which would be hard, and then they would have damages and would have to convince whoever oversees the bankruptcy proceedings that suing the ex-employee is likely to recover money.

And at some point a bankrupt company will get dissolved. That means it ceases to exist. At that point you have no chance. Once dissolved, all obligations of the company and all possible obligations of its previous employees towards the company disappear.

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