It’s not uncommon for rival businesses to try to poach top talent from their competitors to maximise their potential profit. In some cases, a single employee may be headhunted, while in other cases whole teams could be ‘poached’.
In the UK, this is not illegal. However, no business wants to lose their top talent to a rival business, so what can you do to prevent it – or at least, minimise the risk of it happening?
Are there any legal remedies available if this happens?
There is nothing to stop one business approaching an employee of another business with a view to taken employing them. However, employees must adhere to any notice provisions set out in their existing employment contract and must not breach other condition or (reasonable) restrictive covenants in their employment contract.
If the employee resigns from their position with the aim of joining a competitor business who poached them, and they have not and will not breach their employment contract in so doing, they are free to move to that competitor. This will be the case whether one employer or a whole team of employees leaves.
However, if an employee breaches their contract terms when leaving, there could be a potential claim against the employee and, possibly, against the rival company. Many employment contracts contain restrictive covenants preventing employees from working for rival companies within a geographical boundary for a specific period of time.
As an employer, can I prevent this from happening in future?
Most employers use standard employment contracts for all employees setting out their employment terms in relation to termination, working hours, place of work, etc (with the only variations in relation to the employee pay). However, it is important that employers protect their own business interests by placing employees on garden leave following receipt of their notice of resignation; and by including restrictive covenants in the employment contracts.
Such a restrictive covenant can prevent an employee from competing with their former employer by, for instance, dealing with its clients/customers or by poaching other employers of their former employer for a specific time period. However, any such provisions must be reasonable. Employers are entitled to protect their legitimate business interests, but restrictions on their activity after they have left must be reasonable. For example, preventing an employee from working within a given geographical area must be within reason; and any time period must also be reasonable (6 months, for instance, may be reasonable while 2 years may not).
To minimise the risk of a whole team of employees leaving to join a competitor, it is suggested that individual employment contracts are tailored to reflect the team dynamic, paying particular attention to ensuring that all members of a specific team have the same notice period defined in their contracts. This can be a simple but effective approach.
Other key issues for employers to consider to minimise the risk of an entire team of employees jumping ship include:
- Structuring all employment contracts in a way that anticipates a team move by including provisions to prevent it happening
- Ensure your customers or clients are not just looked after by a small group of individuals – vary the individuals which a specific client deals with
- Responding with a clear and concise strategy to a threatened team move
Varying the employees dealing with one client
If a specific client is only used to dealing with just a few employees, they may value the work those employees do for them over the company as a whole. It is good practice for businesses to vary the employees who deal with a specific client so that they sometimes deal with employees outside a ‘core team’ assigned to them. This will foster a relationship with the company as a whole, beyond the core team itself.
This, of course, needs to be balanced against the client’s need to have a required level of consistency and quality that comes from dealing with a small number who are more familiar with their client needs. If this is not achieved, the client could terminate the contract.
Respond with a strategy to a threatened move
An employer should respond with a clear and concise strategy when they find out about a threatened move. Elements of the strategy could include:
- Attempt to establish which team members are involved
- Review their employment contracts
- Analyse the interaction between employees and clients, identifying which clients are most at risk (again, balancing this with the client’s needs)
- Consider splitting the team
- Try to establish whether any members of the team have committed any wrongdoing or have potentially breached their employment terms and conditions
So while preventing another business from poaching your talent cannot be completely prevented, you can take important action to minimise the risk to your business.