Poaching high-flyers from rival businesses is part and parcel of any industry, and print is no exception. It's not difficult for a rival firm to persuade a big-hitter that greener grass is available, should they wish to up sticks. The problem is that when key players leave, they not only take their abilities and expertise, but also a valuable knowledge of their previous employer's clients, stategies and operating procedures.

Canny employers prevent star performers from making off with the crown jewels to the highest bidder thanks to what are known as restrictive covenants or non-compete clauses.

These are written into the employment contracts of senior or key staff preventing them from leaving that company to join a rival outfit - a perfectly understandable desire.

However, legal experts warn that the clause must be properly drafted or it may be worthless; an employee could challenge and, if the contract isn't watertight, could depart leaving your company considerably weaker.

Such clauses should also be a concern for employees; failing to get to grips with what you can or can't do after you leave a business can seriously damage your chances of moving on. Gardening leave, where an employee is effectively paid to sit at home and enjoy some time off, hence the name, is often the amicable result, but there are ways to ensure that it doesn't become a messy process.

"They do make sense for any senior directors - the kind of employees that have access to information that would be useful to a competitor," explains Anne Copley, head of legal at the BPIF. "They have knowledge of areas like pricing structures and, if they went to a rival, then they would know that they could go in for [to win] contracts at a lower price."

Copley admits that print doesn't suffer the same kind of poaching problems that affect the world of finance, for example, where high-flyers are constantly in demand and tempted to defect to rival organisations. But that doesn't mean it's not something to worry about. "We get asked about the subject on a monthly basis," she adds.

Opposing sides
The BPIF gets enquiries from both sides of the fence; both from companies making a last-ditch attempt to prevent an employee from joining a rival and from firms that have taken on an employee from a rival and have received an understandably nasty letter from that company's legal representatives.

There are broadly four types of restrictive covenant: non-compete covenants seek to prevent the ex-employee from directly competing or working for a competitor, usually within a specific geographical area, for a set period of time; non-solicitation or non-dealing covenants aim to prevent an ex-employee from entering into working relationships with former customers; non-poaching of employees prevents an ex-employee from recruiting former colleagues; and restrictions on the use of confidential information, which seeks to prohibit the use of any information acquired by an employee during employment.

Copley explains that, in theory, should any of these rules be broken, then the employer can obtain a court injunction. However, this isn't always as straightforward as it sounds. "The courts are not in the business of stopping anyone earning a living," she says.

It's a growing problem according to Dani Novick, managing director at recruitment specialist Mercury Search and Selection. "Frequently we see employment contracts with long restrictive covenants that are very general about not working for competitors or approaching clients, with either no geographic region or specifying the whole country," says Novick. Typically, courts view this kind of generalisation as restricting the individual's ability to earn a living, a restriction of trade, at which point it often becomes near impossible to enforce."

In order to gain a court injunction, the employer needs to show that the individual is in breach of contract and that the contract is fair and not restricting the employee's ability to earn a living. It's a difficult balancing act for the employer. In the print industry, Copley says that many firms come to her after the employee has left, but by then it's too late. "A lot of printers will go to their lawyers after they have lost their key employee - it's something they needed to have thought about from the beginning."

Employers need to bear in mind that restrictive covenants need to go no further than is reasonably necessary to protect their legitimate business interests. However, this in itself opens up a can of worms: what is reasonable and what is a legitimate business interest? Preventing a sales director from working for a rival business for a 12-month period may be appropriate, but it will be trickier to enforce for more junior members of staff.

"Restrictive covenants can work if they are tightly worded, bespoke and there is a legitimate business interest to protect," explains Copley. "There are no laws to enforce restrictive covenants though. There has to be a serious threat to the well-being of the business."

According to Novick, the only sure-fire way of preventing an employee from working for a rival for a period of time is to extend the notice period and place them on ‘gardening leave'. Six months is the usual amount of time that a court views as enforceable although it's worth noting that the longer the covenant, the trickier it becomes to enforce it. Gardening leave can also involve considerable expense so the employer needs to bear in mind the potential loss of business against the cost.

Hypocritical demands
"Overriding this is the idea that setting contractual boundaries is a bit hypocritical when many employers expect sales people to bring business with them, then magically believe they can restrict this business going elsewhere by getting the person to sign a contract," adds Novick.

"If they expect someone to bring business with them when they join then they should also expect them to take it with them when they leave. However, if they hire on the basis of someone building business while in their employ, it is reasonable to have a clause in place making sure it ties in with the job specification."

Careless drafting of contracts can hinder any chance of an employer succeeding. But on the flip-side, if an employee has been underhand in their attempts to engineer a move to a rival, or made efforts to poach other employees, then a court is likely to find in the favour of the employer.

"The courts have been prepared to enforce restrictive covenants if there is any bad faith on the part of an individual," adds Copley. "If you've kept anything quiet then the employer can sue for damages. If the previous employer can show they have made losses as a result then they can go to court."

Novick says that employees with itchy feet should resist the temptation to lie and tell prospective employers that they have no restrictions. "Covenants can be worked around, even if it takes a few months, and lying could leave you open to dismissal and a potential claim for damages based on misrepresentation, should the company be sued."

The lesson that print companies or employees should take away from this is that restrictive covenants can cause problems if they are not water-tight. Employers that fail to observe this advice might not only lose out on a high-flying member of staff - it might also cost them their clients.

CASE STUDY: RESTRICTIVE CONVENANTS
In 2008, in the case of Kynixa Limited vs Hynes and others, the High Court took a robust approach to three employees who deliberately misled their employer about their intention to join a competitor.

Independent rehabilitation services provider Kynixa took action against the employees, all three of whom left to work for a company with which Kynixa had dealings. The court ruled that they were in breach of their fiduciary duties as they had hidden the fact that they had been approached by a competitor and failed to inform Kynixa that there was a real possibility that they would join.

It proved to be an expensive case for both sides. Kynixa’s costs were estimated to be over £1m, while the court ordered two of the employees to pay interim costs of £350,000. While the employees were not subject to any restrictions in their employment contracts, they assumed that they were free to defect to a competitor. The court found in Kynixa’s favour because the employees acted in bad faith towards their employer.

Poaching staff can also lead to expensive court cases. Also in 2008, Vestra Wealth poached several large teams of employees from UBS Wealth Management. An ex-employee of UBS was co-ordinating the hiring but the defence was that he wasn’t subject to any contractual restrictions. However, the court decided that it was unlikely that departments of UBS would have switched to Vestra without discussions beforehand – employees had covertly colluded in the planning of the move.

The upshot was that the court granted USB a ‘springboard’ injunction against Vestra and prohibited Vestra from poaching any further staff or doing business with existing UBS clients. A full trial was averted after the two sides negotiated a settlement.