What is employee poaching? It is not defined in Jamaican law. However, if you perform an internet search for ‘employee poaching’, you may come upon a definition stating that it occurs where an employer sets out to hire the employees of a competitor. Interestingly, the search results also contain a long listing of links to tutorials on exactly how to lure your competitors’ best employees away. Poaching is becoming more of a problem in Jamaica for small businesses that operate in industries where trained personnel are scarce and in high demand.
Any business that has been a victim of employee poaching can attest to the negative implications the practice can have on a business and, in the long run, the relevant industry. Imagine a scenario where the benefits of the time and money invested in the training of your employees are enjoyed by your competitor before you have the opportunity to recoup your investment in the employee. In addition, there is the ever present risk of proprietary business information in the possession of former employees being imparted to a competitor.
Retaining trained employees that are high in demand can be difficult in the face of tempting offers of increased pay and other perks or benefits from sometimes aggressive, competitors. One cannot simply stop an employee from walking off the job if that employee has decided to seek ‘greener pastures’. However, opportunities for protecting your business and limiting the likelihood and effects of such an occurrence do exist.
Most businesses already utilize Employment Agreements/Contracts of Employment. The standard agreement usually sets out the basic conditions and terms of employment, such as salary, job position, hours of work and termination provisions. However, these agreements frequently do not address several important issues such as:
What happens when an employee leaves a job without giving the required notice and goes to work for a competitor?
How is the employer protected if the former employee utilizes confidential client information and workplace methodology for the benefit of the competitor?
In addition to these important issues, there are also statutory obligations that must be adhered to when drafting Employment Agreements and so care must be taken to ensure that the contract of employment, although agreed to by both sides, is actually enforceable.
Contracts of employment should aim to protect a genuine business interest. As long as the relevant provisions are not more restrictive than they need to be to achieve this objective, the contract should be enforceable. It is recognized that an employer is entitled to use these provisions to protect its human resource which is considered a legitimate business asset. Examples of such provisions are set out below.
Notice Period
While the law dictates the required minimum notice period, it does not prohibit longer notice periods. It may be suitable for a business concerned about poaching to provide for longer notice periods which may have the effect of dissuading employees from “jumping ship”. Longer notice periods may make the transition to a competitor less attractive.
The employment contract, if properly structured, may also contain the following provisions which continue to bind the former employee even after termination:
The Non-Compete clause
This clause is aimed at preventing former employees from competing with the former employer’s business and/or working for a competitor. The former employee can be restricted from conducting business with the previous employer’s clients for a fixed period after termination. The clause can also prevent skilled employees from taking up positions with competitors for a fixed period following termination.
The Non-Solicitation/ Non-Dealing Clause
This clause can prevent a former employee soliciting clients or luring a former employer’s current employees. Poaching is often orchestrated by a former employee who works in tandem with a competitor to lure away a former’s employer’s best employees.
The Confidentiality Clause
The law does not allow an employer to indefinitely prevent a former employee from working for a competitor or competing in his own right. It is therefore important for employers to have in place provisions that protect their confidential information even after termination. In the event that confidential information is misused, the former employer can take legal action to enforce the contract and prevent the unauthorized use and dissemination of its proprietary information.
Conclusion
Businesses have varying needs based on variables such as the manner in which that company operates, the nature of the labour market in the relevant industry and the level of skill required from employees. It is therefore important that these clauses be utilized appropriately for each business.
Contributor: Erika-Rae Harvey
Attorney-at-Law
DunnCox
Unit 17, Fairview Towne Center
St. James
erika.harvey@dunncox.com