For an individual or a team moving to a competitor there is a sensitive balance between, on the one hand, complying with continuing obligations to a current employer, and on the other hand, the steps they can take in preparation for their move. Careful consideration needs to be given to the restrictive covenants, confidentiality obligations, notice and gardening leave provisions (amongst others) and the activities which a current employer seeks to restrict. Generally, the safest practical starting point is to assume that the restrictive covenants are enforceable, however it may be possible to challenge the validity and enforceability of restrictive covenants if they are badly drafted or if they are too broad.
Practical considerations when moving to a competitor either as a team or as an individual include:
- in the case of a team move, how the move should be staged, particularly if the restrictive covenants are expressed in different ways for the various individuals in the team;
- should the moving individual or team tell the new employer about the restrictive covenants and provide them with copies?
- how should the move be communicated and how should members of the team conduct themselves in the lead-up to the move?
- what information can and cannot lawfully be shared with the new employer without breaching confidentiality obligations and other duties to the current employer?
- how does the person leading the move bring in other team members and how does a moving individual or team get the new employer to target people whom they know are potentially good candidates without breaching non-solicitation and non-dealing of staff covenants?
- for senior executives and directors, what are the implications of fiduciary duties owed to the employer?
- where the current employer seeks undertakings, in what form should these be given?
Inevitably a move to a competitor is a difficult and sensitive issue, particularly for the individual leading the move. Individuals moving to a competitor feel vulnerable because they are about to compete with the organisation where they may have spent a number of years and gained a number of colleagues and friends. Emotions often run high. We have significant experience in all types of team move scenarios and can provide independent legal analysis and a coherent strategy, which is usually key to resolving difficult issues.
How Fox & Partners can help…
- advise you and other members of the team on legal obligations to a current employer and on the best way to manage your move to a competitor in light of those obligations. This includes formulating a strategy, advice on the practical do’s and don’ts in a team move scenario and advice on the likely enforceability of the restrictive covenants and how to work around them
- guide you on how the move should be communicated to your current employer
- negotiate on your behalf with the employer you are leaving to agree the terms of your exit or guide you through the process whilst remaining in the background
- advise you on the scope of any undertakings requested from your current employer and the form of undertakings to be given
- engage in discussions with your new employer in order to manage its expectations and ensure it is aware of the overall strategy for extricating the team
- act robustly on your behalf if the matter becomes litigious.
Please call us on 020 7618 2400