Poachers and Gamekeepers - A Practical Guide to Team Moves
Stopping the Issue Arising - Preventative Tactics
Clearly the best aim of any business is to make it unattractive for individuals (and particularly a team) to move in the first place. A business should take a number of steps to provide itself with the greatest protection:
- Keep employees incentivised and motivated so they feel valued, well-remunerated and not disaffected.
- Know what is going on in the workplace.
- If there is a hint that trouble may be brewing look to make opportunities for key individuals to try to make it difficult for them to leave.
- Tie in employees with non cash-incentives with longer vesting periods. If employees have different vesting periods which trigger potentially highly lucrative awards it makes it much more difficult for a group to leave at the same time and to be co-ordinated.
- Make sure garden leave clauses and restrictive covenants are tightly drafted and adapted to the work the employees actually do (the less generic the better).
- Consider (as in Tullet Prebon case) including express clauses in contracts requiring employees to disclose any direct or indirect approach to solicitation by a competitor.
- Limit the exclusivity of clients to one or a few individuals (if at all possible).
Don't Forget the Commercial Point
- How will this affect client relationships? How can we use this best to our advantage?
- How will you manage the publicity?
- Remember the cost and expense of this type of litigation and think about the demands on management time.
- Increase random checks on individuals as soon as anything suspicious arises.
- Be aware of unusual activity at times when the employee is not usually working, use of computer, downloading of names and addresses, high amounts of photocopying, etc.
- Alerts should be raised if an employee or a number of employees request to see their contracts of employment.
- Check activities of suspected employees at peak periods during the day as that may be when they think extra downloading or printing is less likely to be detected.
- Check the tracking capability of any document management system.
- Speak to employees who are suspected as soon as possible and keeps notes of what is said. The earlier that employees are spoken to and the greater number who are spoken to, the much greater the chance will be that someon will be caught lying later on. It may also be easier at this stage to find ways of incentivising unhappy employees to stay and you may even find out who is co-ordinating things.
- Where serious suspicion is arounds, forensic examination of computers and equipment could be undertaken. This should be done lawfully and with a view to avoiding any allegation of constructive dismissal, but can include checking telephone records, searching emails, imaging hard drives and (although this is more extreme) installing and monitoring keystroke logging software.
- Can you use the Computer Misuse Act?
- Conversely do not forget the Data Protection Act/RIPA issues.
Enforceability of Restrictive Covenants
Try to minimise the scope there is to argue that the employees' post employment restrictions are unenforceable:
- Do they apply to an individual?
- Do they seek to enforce a legitimate interest?
- Try to avoid unreasonable responses which could give rise to arguments of constructive dismissal.
Going for Litigation
There are various options to consider. It is always important to think carefully, have a strategy and not just react to events. The various potential options include:
- Enforcing garden leave clauses.
- Enforcing Restrictive Covenants.
- Enforcing Database Rights - avoids the need to show confidentiality in underlying material.
- Inducement - restraining further breaches of contract.
- Breach of Fiduciary Duties (owed by directos and Senior Employees, Companies Act 2006 - obligation not divert business opportunities).
- Different types of application - on notice (3 clear days), short notice, without notice ("where there is exceptional urgency" and "where the overriding objective is best furthered by doing so".).
Important issues to consider in deciding which option to take, include:
- Could giving notice undermine the effect of the application?
- How long have you known about the potential move and its impact?
- Letters before action need to be drafted to departing employees and the recruiting employer.
- Undertakings should always be requested first.
- In addition to the main injunctive relief sought, will you require other orders for delivery up of BlackBerries, laptops or infringing copies of the Employer's database, etc. or preservation orders?
Employees will always try to argue constructive/unfair/wrongful dismissal
To minimise the risk of an employee successfully arguing that he/she has been constructively dismissed, the following areas need to be managed sensitively and carefully:
- Suspension - ensure that the normal policy/procedure for suspension is followed and a genuine investigation is carried out.
- Disciplinary proceedings - ensure the disciplinary procedure is properly followed and that the employee has the right of appeal, etc.
- Garden leave - ensure that the employee's contract of employment is strictly followed.
- Notice - ensure that the notice provisions in the employee's contract are met, especially in relation to payments in lieu of notice.
If the policies/procedures and the employee's employment contract are not adhered to, rather than just stating that the contract has been breached and the restrictions do not apply, the employee may bring a claim for unfair/wrongful dismissal in the Employment Tribunal with the aim of getting a decision that there has been a breach of contract.
Keeping an eye on the endgame
- What are you aiming to achieve? Will undertakings give you the protection you need?
- Seize the moment to settle.
- Remember that you should constantly review the initial commercial rationale of the application for any injunction in the light of developments if the matter proceeds to a trial (speedy or otherwise).