How to keep hold of your staff

2015-06-17 Philip posted:

It is not unusual for employment contracts to include clauses restricting a former employee from poaching their ex-colleagues by:

  • a ban on approaching ex-colleagues encouraging them to leave the employer; and
  • a more general ban on employing ex-colleagues, regardless of who approached whom first.

Several court decisions have held that trying to prohibit recruitment of a former colleague who freely chooses to seek new employment, without any enticement, is against public policy. As long ago as 1994 the Court of Appeal stated that employees are not mere assets of the employer “like apples or pears”. In 2013 the High Court stated that these restrictions would prevent people from “earning their living as they choose”.

So should covenants prohibiting not just the solicitation of former staff but also their employment irrespective of who made the first contact, still be written into employment contracts? It isn’t exactly best employment practice but ‘yes’ for two reasons:

  1. The clauses have a deterrent effect. It is rarely clear exactly who contacted whom first. Was the employee’s approach really on their own initiative or had there perhaps been a hint or a nudge from a former colleague?
  2. In the 2015 case of Willis v Jardine Lloyd Thompson, a team move orchestrated by senior managers in breach of their duties greatly destabilised the whole workforce. The Court of Appeal allowed a short injunction prohibiting the employment of any staff from the former employer, even if they had not been approached to jump ship first.

It is important to realise that such wide covenants are probably still invalid. In Willis v Jardine Lloyd Thompson case above, it was because of the special duties the senior managers owed the company - not just a regular contractual covenant that led to the injunction being granted. However, non-employment covenants are still worth having as back up; for example, where the actions of senior management have been so outrageous as to justify a total prohibition on the employment of their colleagues. The covenant should be drafted as a separate clause so that it will not invalidate the legitimate wording or other clauses preventing the solicitation of staff or customers.

We can help you by drafting clauses and agreements to protect your business and its interests. Use the ‘Contact Us’ tab on the top right of this page.

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