Beware of restricted covenants on candidates says law firm
25 March 2015
Recruiters risk losing out on fees if they are unaware of restricted covenants or other employment obligations placed on their candidates, David Williams, managing partner and head of employment at law firm Kemp Little, told Recruiter.
Wed, 25 Mar 2015Recruiters risk losing out on fees if they are unaware of restricted covenants or other employment obligations placed on their candidates, David Williams, managing partner and head of employment at law firm Kemp Little, told Recruiter.
Speaking after an event at Kemp Little’s Cheapside offices in the City of London this morning [25 March], Williams said if any issues arise with such covenants, then the new employer could decide not to take that person on. An example might be if a candidate who is restricted from working for a competitor for six months after leaving their previous employer and that previous employer decides to hold the candidate to that restriction.
Recruiters could also face legal ramifications if a candidate was found to have breached contractual obligations the recruiter could then be forced by law to disclose information on what clients have asked them to do – to hire a particular person, for example.
Williams’ advice:
He said recruitment companies should also ensure contracts with their own staff are water tight.
Earlier in the morning Kemp Little senior associate Virginia Allen told the audience an implied term within all employment contracts was that the employee will serve the employer with good faith and fidelity. In law, that obligation can often be referred to in the absence of contractual protections but it does not prohibit the employee taking preparatory steps to compete with their current employer should they leave.
Allen’s tips:
Kemp Little associate Anna Byford said other ways to prevent employees working with clients, particularly if they were working out a notice period, was to consider the use of limiting the employee’s duties, pay them out in lieu of notice or place them on garden leave.
Such preventions carry risks though – limiting duties could bring breach of trust or confidence claims. Payment in lieu of notice, depending on the employment contract, could also release the employee from post-termination restrictions.
Speaking after an event at Kemp Little’s Cheapside offices in the City of London this morning [25 March], Williams said if any issues arise with such covenants, then the new employer could decide not to take that person on. An example might be if a candidate who is restricted from working for a competitor for six months after leaving their previous employer and that previous employer decides to hold the candidate to that restriction.
Recruiters could also face legal ramifications if a candidate was found to have breached contractual obligations the recruiter could then be forced by law to disclose information on what clients have asked them to do – to hire a particular person, for example.
Williams’ advice:
- Make sure you have sound knowledge of restricted covenants and obligations.
- Be careful with what you write down or record, including in emails, as deleted emails and voicemails can be retrieved and could “land clients in it”.
He said recruitment companies should also ensure contracts with their own staff are water tight.
Earlier in the morning Kemp Little senior associate Virginia Allen told the audience an implied term within all employment contracts was that the employee will serve the employer with good faith and fidelity. In law, that obligation can often be referred to in the absence of contractual protections but it does not prohibit the employee taking preparatory steps to compete with their current employer should they leave.
Allen’s tips:
- Ensure the employment contract makes clear that the duty of fidelity continues during garden leave and outside of office hours.
- Contracts and job descriptions should cover the employer’s expectations of the employee’s role and provide the employer with adequate post-termination protection.
- Contractual terms should be kept up-to-date as the employee is promoted or takes on new responsibilities.
- Create clear IT policies, including the requirement for regularly changed company logins rather than personal logins to stop “rogue access” if an employee leaves.
- Have employees sign an agreement to acknowledge that company data is removed from personal devices and cloud storage accounts before departure.
Kemp Little associate Anna Byford said other ways to prevent employees working with clients, particularly if they were working out a notice period, was to consider the use of limiting the employee’s duties, pay them out in lieu of notice or place them on garden leave.
Such preventions carry risks though – limiting duties could bring breach of trust or confidence claims. Payment in lieu of notice, depending on the employment contract, could also release the employee from post-termination restrictions.
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