The labour court has issued an order, with the consent of ex-Vodacom employees, to enforce their restraints of trade after reports emerged in November that they were working with rival MTN South Africa.
Vodacom said in a statement on Friday that it was “forced” to bring an application requesting the labour court to find that by being employees of a company called Tuum Communications, which would be an “exclusive service provider” to MTN, that the former employees were in breach of their restraints.
Though some reports suggested that MTN had denied using an agreement with Tuum as a “guise” to hire the restrained employees away from Vodacom.
From a source familiar with this issue, who wished to remain anonymous, to the effect that MTN was “knowingly” targeting employees of Vodacom’s corporate business unit who were restrained from working for a competitor.
“These Vodacom employees have been promised that they will be employed in the MTN environment when their restraint of trade has lapsed and that they can continue to manage the portfolio,” the source said, accusing MTN of unethical behaviour and unfair business practices.
The source claimed further that Tuum would serve as an “incubation hub to bypass the restraint of trade for any other Vodacom staff that MTN is seeking to employ in the future”.
But MTN hit back at the allegations, saying it had “no intention to directly employ any Tuum employee now or in the future”.
‘Not a guise’
“The partnership with Tuum Communications, or any of MTN’s other similar partnerships, are not in any way a ‘guise’ to bring on new employees or to circumvent restraints of trade,” MTN spokeswoman Jacqui O’Sullivan said at the time.
Vodacom sought an order from the labour court that the restraints with the former employees were binding and enforceable given that the company could “take the necessary steps to protect its proprietary interests”.
“It appears that through the employment of ex-Vodacom employees in a business called Tuum Communications, an attempt was made to circumvent the enforcement of their restraints. Tuum Communications was, allegedly, created by MTN to facilitate the poaching of high-priority staff and corporate customers from Vodacom,” Vodacom said.
“We were compelled to bring an application in the labour court to enforce the restraints against each of these ex-employees,” it said. “The ex-employees have eventually consented to the relief that Vodacom sought in the application, having forced Vodacom to bring the application to the labour court.”
MTN’s O’Sullivan said in November that Tuum serves MTN’s Enterprise business unit a new sales channel. “As part of MTN’s turnaround of its Enterprise business, channels have been developed to create pipelines of new business, in both the fixed and mobile businesses, with a strong focus on small and medium enterprises.
“The channel development is being undertaken using a partnership model that is well known within the industry and will also facilitate entry to the telecommunications sector, particularly by black-owned companies. The extraordinarily high investment costs associated with the sector make it an industry with high barriers to entry and MTN’s partnership model seeks to help smaller companies overcome those barriers,” she said.
“MTN’s Enterprise business was approached by Tuum Communications to enter into a sales agreement based on the partnership model. MTN has facilitated a number of these partnership agreements in the recent past and, following due process, MTN signed an agreement with the company.
“As a part of the due process, MTN did enquire as to the company directors’ restraints of trade. MTN was informed that as Tuum Communications was being established to serve the industry and that it would be network agnostic, their former employers were not seeking to exercise the restraint clauses, within their individual contracts.
“The agreement between MTN and Tuum has been established using a partnership model that encourages the development of new business by MTN offering a financial ‘safety net’ for the first few months (or up to a year), dependent on the skills on offer and the targets being set,” O’Sullivan said.
“In the case of Tuum Communications, the company has very sound expertise on offer and it will be expected to deliver against extremely ambitious targets — in line with partnership agreements of this nature. For this reason, retainers commensurate with the company’s skills set and targets have been agreed. MTN is committed to the development of new, black-owned businesses within the telecoms sector and channel development through this partnership model is a powerful way to achieve this.
“It is disappointing that these anonymous individuals have chosen to misrepresent the channel partnership model and to level unfair and false accusations against both MTN and Tuum Communications. MTN’s turnaround of its Enterprise business will continue to push to facilitate more access to the telecoms sector by smaller and black-owned companies and MTN will continue to act in a manner that is both ethical and respectful to the service providers it engages, as well as all other industry operators,” O’Sullivan said at the time.