Poaching staff from your former employer – a dangerous game
This recent news report from the Evening Standard shows how potentially dangerous and costly it can possibly be to breach your contract of employment. The Standard reports that John Bruce – one of the UK’s top “model bookers” – has been successfully sued for breach of contract by his former employer (Premier Models Management) after he poached models from his employer, breached confidentiality, and ran up tens of thousands of pounds of bogus expense claims.
Whilst working for Premier Models Management (“Premier Models”) Mr Bruce started a competing model agency with a friend of his, Mr Paolo Ribeiro, which was named “Paolo Ribeiro Management” (“PRM”). Mr Bruce had a seat on the board of directors and was a 50% shareholder in the company. He used existing contacts that he had for models which he had been privy to due to his work with Premier Models and booked those models for jobs with PRM. This led to a loss of work (and a consequent loss of profits) for Premier Models. Mr Owen (co-founder of Premier Models) discovered that Mr Bruce had been fraudulently claiming expenses and subsequently also discovered that he had using Premier Models’ confidential information to compete with them. Proceedings were therefore issued in the High Court against Mr Bruce for breach of his contract of employment and Premier Models were successful in their claim for breach of contract and claim for breach of confidentiality
What restrictions would the Defendant have been subject to?
The Defendant would have been subject to express and implied terms under his contract of employment which would have restrained his ability to act in certain ways. There would certainly have been an implied duty of “fidelity” (loyalty) to his employer – which he would have breached by acting in the manner that he did. Further, he would probably have had other express terms in his contract of employment which sought to restrain his behaviour in the interests of his employer, such as:
- An express duty to maintain confidentiality
- Restrictive covenants – essentially a promise not to act in particular ways after he left employment. These would have restrained (in most cases) the Defendant’s ability to (for example) poach former employees, clients etc. of his employer for a restricted period of time after he left employment
How did the Defendant breach those restrictions?
The Defendant was still in employment at the time that he breached the restrictions so he would have breached both express and implied terms in his contract of employment. The implied term that he would have breached was the duty of fidelity and the express term that he would have breached was the duty to maintain his employer’s confidentiality.
What are the consequences of breaching your contract of employment?
If there is a successful claim for breach of contract made then the following remedies may be applicable, among others (which of them actually apply depends on the circumstances):
- An injunction (if damages aren’t sufficient)
- Damages for any losses sustained by your employer
- An account for any profits that you’ve gained as a result of the breach
What lessons does this contain for employees?
Employees should be particularly careful – both whilst the contract of employment exists and after termination – not to take actions which they may think constitutes a breach of contract. Employees should get legal advice on the effect of post-termination restrictive covenants on their future career. If your actions breach the terms of your contract (by, say, setting up in competition) then you may receive an unwelcome letter on your doormat from your (previous) employer.
