Advice for team poachers and those who want to protect themselves from them

Mon, 1 Feb 2010 | By Richard Martin, partner and John Brandon, solicitor in employment law team, Speechly Bircham LLP

 

As sure as the New Year gym membership surge, so the emergence of the financial services sector from recession brings the inevitable upturn in team recruitment activity.  As Vestra found just before the recession, and as BGC is discovering in its current spat with Tullett, such recruitment is increasingly fraught with complications (see below).

The need to respect the confidential information of, and to comply with post termination restrictive covenants owed by the relevant employees to, the old employer are nothing new. What is new, however, is the focus on the obligations of the target team while they remain employees of the old employer.

Employees owe implied duties to their employer to act in its best interests. The Vestra case emphasised that for most employees those duties will extend to informing the employer of the intention of others to leave - someone who knows that he is part of a team being poached owes a duty to inform his employer.  An employee should also never encourage another to leave.  Failure to comply can result in injunctions, damages, significant legal costs and major disruption to the new employer as it tries to bed down the recruited team.  If the old employer can persuade one of the team to come clean, as Tullett has done with BGC, then it may be very easy to produce evidence of apparent wrongdoing. 

Electronic disclosure plays an increasing role. The old employer may find emails and telephone records on its systems or relating to the mobile phones and PDAs it provides to its employees which show collusion between employees.  Equally the target team may have to disclose records from their own personal email accounts or phones/PDAs (perhaps acquired for the very purpose of discussing the potential move away from their employer’s prying eyes). 

The advice therefore both to the poaching employer and the target team is to proceed with great care.  Get advice at a very early stage.

The poaching employer should contemplate separate individual approaches to each employee which are not (and whose terms are not) in any way contingent on others following.  It should think about how it knows the identity of the individuals it wants – the names should not come from one of the team and a headhunter may be useful here.  The poaching employer should give clear instructions to the individuals not to discuss the offers with each other and ideally should ensure that none knows of the approaches to the others.  The individuals should avoid contact with each other via any kind of electronic or paper means that might indicate collusion concerning their departure. 

The best advice may be to think over a longer term.  Rather than seeking to take a team en masse, it may make sense to pick out a couple of key figures who, if recruited, might encourage the others to follow in due course.  It may have less impact, may take a little longer, and may result in some of the team and some of the business being left behind, but at the end of the day it may mean less time in court and in lawyers’ offices.

Employers who are concerned their staff may be being approached have various options.  Well drafted policies should allow for the monitoring of internal IT systems for evidence of departure discussions.  Discussions with staff, often more junior team members, may elicit information.  Care must be taken not to apply too much pressure to avoid allegations of constructive dismissal and/or bullying. 

If the old employer is to retain the team then action should be taken to persuade them round long before their minds have been set on departing.  Once an employee has decided to leave then the emotional tie with the employer is broken and it is often very difficult to rebuild.  At the end of the day some staff turnover is inevitable and an employer can often do more harm than good if it fails to treat its departing staff with dignity and respect. 

Encouraging staff to be engaged with the organisation and to have loyalty to the employer rather than a key individual within it, seeking to disrupt cliques and discouraging individual empire building may be more effective long term ways of preventing mass team departures.