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Restrictive Covenants for Recruitment Consultants
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Restrictive Covenants for Recruitment Consultants
As all industry sectors become increasingly competitive, strategies to retain existing customers and clients are at least as important as the focus on new business development.
From the recruitment professional`s perspective, this approach manifests itself in the number of employees - and so prospective candidates - who are subject to wide-ranging restrictive covenants in their contracts of employment. These restraints, which might seek to prevent post-termination competition per se or only the solicitation of customers or staff, used to be the preserve of senior sales employees. It is now unusual to find a contract of employment without post-termination restraints.
From the recruiter`s perspective, this gives rise to at least two particular issues:-
* Advising clients on the extent, and potential impact, of the restrictive covenants in a candidate`s current contract of employment.
* The spectre of the recruitment consultant itself being sued for inducing a breach of contract simply by reason of it facilitating the move that gives rise to a breach of the restrictive covenants.
Litigation against recruitment consultants on covenant issues is still rare in the United Kingdom, but it is increasingly threatened and anecdotal evidence is that some claims are in the process of being brought. It is something that consultants do need to be alive to then - both in terms of giving the client the best service possible and in protecting the consultant itself.
At its most basic, this requires three elements:-
* A proper understanding of the issues.
* Proper due diligence with prospective candidates.
* Clearly defined rules of engagement with clients.
The issues
There are generally four types of contractual restraint that can continue to bind an employee even after his employment relationship has ended:-
* A restriction on him competing with his former employer for a period post-termination.
* A restriction on him soliciting customers, prospective customers or staff for a period post-termination.
* A restriction on him dealing with customers or prospective customers for a period post-termination.
* A restriction on the use or dissemination of confidential information.
The drafting and enforceability issues on these covenants are beyond the scope of this article, but there is nothing inherently unenforceable in the restraints. And so an ex-employee who does act contrary to them may be acting in breach of contract. That means that he could either be the subject of an injunction application (a court order preventing him from continuing to breach), a breach of contract claim for damages or both.
Importantly, it is also unlawful to induce a breach of contract. And it is in this respect that clients and the recruitment consultant itself are exposed. If the client hires a candidate and then puts him in a position whereby he breaches his post-termination restraints it may well be sued for inducing the consequent breaches. And the recruitment consultant itself might also find itself in the firing line: `persuading` a candidate to take on a role in which it was inevitable that he would be breaching his restrictions. .....
Source:
http://www.recruitmenttimes.co.uk/restrictivecovenant.php
From the recruitment professional`s perspective, this approach manifests itself in the number of employees - and so prospective candidates - who are subject to wide-ranging restrictive covenants in their contracts of employment. These restraints, which might seek to prevent post-termination competition per se or only the solicitation of customers or staff, used to be the preserve of senior sales employees. It is now unusual to find a contract of employment without post-termination restraints.
From the recruiter`s perspective, this gives rise to at least two particular issues:-
* Advising clients on the extent, and potential impact, of the restrictive covenants in a candidate`s current contract of employment.
* The spectre of the recruitment consultant itself being sued for inducing a breach of contract simply by reason of it facilitating the move that gives rise to a breach of the restrictive covenants.
Litigation against recruitment consultants on covenant issues is still rare in the United Kingdom, but it is increasingly threatened and anecdotal evidence is that some claims are in the process of being brought. It is something that consultants do need to be alive to then - both in terms of giving the client the best service possible and in protecting the consultant itself.
At its most basic, this requires three elements:-
* A proper understanding of the issues.
* Proper due diligence with prospective candidates.
* Clearly defined rules of engagement with clients.
The issues
There are generally four types of contractual restraint that can continue to bind an employee even after his employment relationship has ended:-
* A restriction on him competing with his former employer for a period post-termination.
* A restriction on him soliciting customers, prospective customers or staff for a period post-termination.
* A restriction on him dealing with customers or prospective customers for a period post-termination.
* A restriction on the use or dissemination of confidential information.
The drafting and enforceability issues on these covenants are beyond the scope of this article, but there is nothing inherently unenforceable in the restraints. And so an ex-employee who does act contrary to them may be acting in breach of contract. That means that he could either be the subject of an injunction application (a court order preventing him from continuing to breach), a breach of contract claim for damages or both.
Importantly, it is also unlawful to induce a breach of contract. And it is in this respect that clients and the recruitment consultant itself are exposed. If the client hires a candidate and then puts him in a position whereby he breaches his post-termination restraints it may well be sued for inducing the consequent breaches. And the recruitment consultant itself might also find itself in the firing line: `persuading` a candidate to take on a role in which it was inevitable that he would be breaching his restrictions. .....
Source:
http://www.recruitmenttimes.co.uk/restrictivecovenant.php
