Losing staff to your competitors

The first point, however, is that if you are only turning your mind to this question once the staff member has left, it’s probably too late!  You owe it to yourself and your business to turn your mind to this issue before you hire staff. At the outset, it is important to have appropriate contractual protections in place.  Contractual provisions available include:

• A restraint prohibiting the staff member from working for a competitor, poaching staff or soliciting clients.  The restraint period can be varied for the circumstances (although it must be reasonable).  Restraints may also be limited to a specific geographical area. 

• While the law generally provides that confidential information will remain the property of your business, it is often worthwhile being more specific in a contract.  In particular, it is often worthwhile specifying any particular or unusual items that may be considered confidential information, and being particular about your expectations in regard to their treatment. 

• If a staff member is dealing with or developing intellectual property, you should be clear about ownership of that property.

• Think carefully about notice period.  It needs to be long enough to protect your interests, but not too long.  Having an appropriate notice period will buy you time, particularly if you have the contractual right to put the employee on “garden leave”.   

While the above tools can assist in protecting your business both from employees going to work for competitors, and also from employees stealing confidential information or intellectual property, sometimes they may not be enough. 

There are a number of legal avenues that may be available in the event that you suspect a staff member is taking confidential information or intellectual property.  In the case of employees, such options may include:

• Bringing a claim against the employee in the Employment Relations Authority for breach of contract;

• Obtaining an Anton Pillar Order against the employee (effectively a search and seizure order allowing you to enter various premises and seize information that has been stolen); and/or

• Obtaining a compliance order or injunctive relief requiring the employee to comply with their employment obligations.

Needless to say, each situation would need to be looked at carefully on its own particular facts, and the appropriateness of these solutions weighed up.

I would always recommend that in the event things go pear shaped, seek legal advice at the earliest possible opportunity.  After all, a stitch in time will often save nine.

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