In a recent High Court case involving defections from one “inter-dealer” broker (Tullett) to another (BGC) battle royal was waged over a considerable number of issues. One of them related to a clause in the Tullett contract of employment which required an employee to disclose to Tullett management any approaches, direct or indirect, or attempts at solicitation of the employee by a competitor. If enforceable this would mean that a phone call from a headhunter to an employee on behalf of a prospective employer would be caught and a failure to report to management would be a breach of contract by the employee.
Tullett relied on this clause amongst others to try to prevent staff moves to BGC. They said that it was a clause that helped them to maintain a stable staff and give it time to try to ensure a solicited staff member did not succumb to the blandishments of and, no doubt, enormous carrot dangled by the soliciting party.
To counter this it was argued by the staff that the clause was in restraint of trade and not enforceable because of that; further it was said that such a clause could improperly deter employees looking for other jobs.
The court decided that the clause was effective and not an unlawful restraint of trade. It went further and accepted that there was an implied (i.e unwritten) obligation on desk heads to disclose to Tullett if they became aware (or were involved in) any proposed team moves to a rival. This was in line with the fiduciary duty of senior personnel.
Employers should consider the inclusion of similar provisions in their contracts for personnel liable to be involved in team moves or being head-hunted. In some cases they may prove not to be enforceable but they give employers leverage if hostilities break out. These cannot be imposed on existing contracts but are suitable for inclusion in contracts of new recruits.
