Is it safe to take on a team move?
12 September 2012
You interview a new candidate, who is a senior manager. He looks good on paper, but he wants to bring his team with him to a new employer. Are there any legal risks involved?
Your client is looking to make an important hire and increase its head-count in a particular area.
You see a new candidate — a very senior manager employed by a competitor of your client, who is interested in moving.
He has a team of good people working under him and he knows several of them would probably like to follow him. He asks whether your client is interested in a team move and would like him to approach them. What do you say?
You should say no, at least until you have properly understood the candidate's duties to his current employer and the risks to your client of encouraging him to bring colleagues with him.
In recent years the law has changed and team moves carry greater risks than ever before, both for the candidates moving and the new employer that takes them on.
This is because the formerly rigid division between management and labour has broken down, and the distinction between those who direct and those who work has become blurred. The law has come to recognise more and more that directors are not the only ones who should be expected to put the interests of their company before their own.
In encouraging more junior members of his team to leave, the candidate is very likely to breach his contractual obligations towards his current employer.
All employees owe a duty of fidelity and loyalty to their employer, and a senior manager encouraging more junior members of his team to leave would probably be in breach of that duty.
However, following a line of cases decided by the courts over the past 10 years, the candidate may even owe more onerous fiduciary duties, which require him to act in the employer's best interests.
As a very senior manager entrusted with a high level of responsibility, he may be more akin to a director. This could mean that not only should he avoid encouraging any of his team to leave and join a competitor, but that he is actually under an obligation to tell his employer if he knows that any of them are considering doing so.
The candidate may even be in breach of his legal duties if he does not tell his employer of his own misconduct in suggesting to his team that they move with him.
This is of concern to the client, as the candidate's current employer may look to it for compensation for any loss it suffers as a result of the client encouraging the candidate to breach his duties. Inducing an employee to breach his contract, or unlawfully interfering with the employer's business, would expose the client to claims.
So how should a recruiter pick their way through this minefield, and be of assistance to a client or candidate?
Here are the key points.
• Know the candidate. Are they are a partner, or a director registered under the Companies Act? If so, they will owe fiduciary duties and must act in the best interests of their firm. If they are an employee, they may still owe fiduciary duties if they have a senior role and enjoy a high level of trust.
• Avoid situations where senior candidates are involved in the recruitment of more junior colleagues.
• Candidates should not pass on details of other individuals who could be approached, or any information that could be useful to the client, such as the salaries of colleagues.
Recruiters can, in fact, be of great use to clients and candidates in a team move situation, and it may be entirely above board if each individual is recruited separately without the assistance of senior members of the team.
You see a new candidate — a very senior manager employed by a competitor of your client, who is interested in moving.
He has a team of good people working under him and he knows several of them would probably like to follow him. He asks whether your client is interested in a team move and would like him to approach them. What do you say?
You should say no, at least until you have properly understood the candidate's duties to his current employer and the risks to your client of encouraging him to bring colleagues with him.
In recent years the law has changed and team moves carry greater risks than ever before, both for the candidates moving and the new employer that takes them on.
This is because the formerly rigid division between management and labour has broken down, and the distinction between those who direct and those who work has become blurred. The law has come to recognise more and more that directors are not the only ones who should be expected to put the interests of their company before their own.
In encouraging more junior members of his team to leave, the candidate is very likely to breach his contractual obligations towards his current employer.
All employees owe a duty of fidelity and loyalty to their employer, and a senior manager encouraging more junior members of his team to leave would probably be in breach of that duty.
However, following a line of cases decided by the courts over the past 10 years, the candidate may even owe more onerous fiduciary duties, which require him to act in the employer's best interests.
As a very senior manager entrusted with a high level of responsibility, he may be more akin to a director. This could mean that not only should he avoid encouraging any of his team to leave and join a competitor, but that he is actually under an obligation to tell his employer if he knows that any of them are considering doing so.
The candidate may even be in breach of his legal duties if he does not tell his employer of his own misconduct in suggesting to his team that they move with him.
This is of concern to the client, as the candidate's current employer may look to it for compensation for any loss it suffers as a result of the client encouraging the candidate to breach his duties. Inducing an employee to breach his contract, or unlawfully interfering with the employer's business, would expose the client to claims.
So how should a recruiter pick their way through this minefield, and be of assistance to a client or candidate?
Here are the key points.
• Know the candidate. Are they are a partner, or a director registered under the Companies Act? If so, they will owe fiduciary duties and must act in the best interests of their firm. If they are an employee, they may still owe fiduciary duties if they have a senior role and enjoy a high level of trust.
• Avoid situations where senior candidates are involved in the recruitment of more junior colleagues.
• Candidates should not pass on details of other individuals who could be approached, or any information that could be useful to the client, such as the salaries of colleagues.
Recruiters can, in fact, be of great use to clients and candidates in a team move situation, and it may be entirely above board if each individual is recruited separately without the assistance of senior members of the team.
