How to prevent your staff getting poached

by Miklos Bolza05 May 2016
We chatted to Julia Yeo, employment law specialist at Clyde & Co, about how companies can stop this from happening.
“While public interests demand that employees be free to seek better employment opportunities, the law recognises that companies may have legitimate business interests,” she said.
To prevent competitors from raiding staff ranks for key contributing employees and stop departing employees from encouraging other staff to leave with them, employers should use non-compete and non-poaching agreements.
“These are signed between the employer and employee where the latter agrees to a post-termination period where they will not join a competitor and agree not to entice other employees to leave.”
With these contracts in place, employers can seek injunctive relief – legal remedies in a civil lawsuit – from the courts to prevent staff being poached by competitors or departing employees. Employers can also obtain damages for any losses arising from these breaches, Yeo added.
Both non-compete and non-poaching agreements should be put in place at the time of hiring. Care should be made not to make these contracts too overreaching as well, she said.
“The courts look at such agreements very strictly and would only uphold them if they are reasonably drafted no widely than is necessary to protect the employer's legitimate business interests.”
Business interests recognised by the courts include but are not limited to valuable trade connections, goodwill, confidential and proprietary knowledge, and maintaining a stable workforce.
“In determining whether such agreements are drafted reasonably, the court will examine various factors such as whether the post-termination period of restraint is unreasonably long and whether the restricted activities and geographical scope are in areas where the ex-employees were materially involved in.”
Clear drafting is also of the utmost importance, she stressed. Avoid wide, all-encompassing template clauses and agreements which do not consider the appropriate period, scope and activities which are to be restrained.
“It bears highlight that such agreements need not be cast in stone and the scope of restraint should be regularly reviewed as the employee moves up the ranks or takes on new positions,” she added.
For firms worried about international poaching efforts, employers may be able to rely on some anti-predatory hiring statutes, Yeo said.
“Certain (usually civil law) jurisdictions see talent poaching as unethical and legislate against it.”
However, common law jurisdictions tend to see poaching from the public interest perspective where it encourages employee mobility and their right to livelihood, she added.
“Check enforceability of your non-compete agreement outside Singapore, in particular the governing law of the contract and the agreed dispute forum where you can commence legal action.”
Additionally, other talent retention tools such as loyalty payments and claw-back schemes can also be considered, she said.
“These do not directly prevent competitors from poaching but create a financial disincentive to employees from leaving and joining a competitor.”
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  • by Steven Yeong 7/5/2016 9:52:56 AM

    Non-compete job contracts are a double-edge sword. It maybe a disincentive for very talented candidates to join your organization if the non-compete is say 6 months or more. At the end of the day, HR is better off designing better retention strategies where employees feel engaged and rewarded.

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