The abolition of slavery and business today
PUBLISHED: 15:54 25 September 2012 | UPDATED: 21:56 20 February 2013
A free man can work where he likes? Yes, but not using someone else's proprietory knowledge, says Darren Sherborne, of Sherbornes Solicitors LLP
The abolition of slavery and business today
A free man can work where he likes? Yes, but not using someone elses proprietory knowledge, says Darren Sherborne, of Sherbornes Solicitors LLP.
In any business where customer contact or technical knowledge are an important part of the business, your greatest asset (your people) can quickly turn into your greatest threat (a competitors people). But what has this got to do with the abolition of slavery?
Some companies do try to impose contracts which seek to stop staff going to the competition, but most are under the illusion that these restrictions are not enforceable. Its certainly true to say that since the abolition of slavery, judges can be a bit funny about ruling that a free man in this country cant go and work for whomever he likes, or she likes for that matter. It would seem strange if, in a country that prides itself on freedom of choice, the law allowed people to be bound to one master against their will. It does happen of course. Take contracts in the armed forces for example, but that comes from recognition of the practical point that it would be bad for all concerned if a persons original commitment could be reconsidered at the first sign of trouble.
On the whole, it is considered to be the domain of less refined countries to bind a person to their employer against their will, and most sane readers will see the sense in that. However, it must be right that a business can protect itself from the potentially devastating effect of a vital or key person deciding to move to a competitor and taking their knowledge with them. In this respect, the law is able to gallop to rescue of the business owner, protecting investment and preventing what can sometimes be catastrophe, but the laws nick of time assistance in such matters is less like the Lone Ranger and more akin to Miss Marple, as it tip toes around the still delicate matter of enforced servitude.
The good news is that any business can protect itself and the law recognises this need. Just as well, because the impact of a key technical person leaving and going to a competitor can be devastating. Often for MDs, its not the fact that the person decides to leave, but much more about the fact that their knowledge, and sometimes the business product, will now be in the hands of a competitor. Introducing restrictions doesnt have to be done at the start of the relationship, they can be introduced at any time if a need becomes apparent. I have even seen cases where a dismissal of an employee has been held to be fair, simply because the employee refused to agree to new restrictions.
The reason people are under the illusion that such restrictions are worthless is that they are dependant on everything being done properly. Not just the drafting of the clause that restricts an employee, but on the actions of the employer when they find out that an employee intends to leave. In short, the restriction has to be drafted in a way that goes absolutely no further than is necessary to protect the business interests. If your business is frozen prawns, and you have a technical genius in the process of freezing them, you could stop him freezing prawns for a competitor for a period of time, you might even stop him freezing other seafood, but you wont be able to stop him freezing chicken. Likewise, if you have a salesman with all your relationships in Gloucestershire, you could stop him selling in Gloucestershire for a time, but you wont be able to stop him in Oxfordshire.
The other big mistake employers make when faced with this situation is how they act when the employee first says they are leaving. The wise thing to do is remind the employee of the restrictions, not, as some have done, agree that one or two clients or products wont matter. As soon as the employer shows that the restriction as drafted is not of importance, then the court will question whether the whole restriction is really necessary, and if its not necessary, then we are back to the abolition of slavery.
In any business where certain individuals hold key knowledge, be it technical knowledge or customer contacts, then the business is perfectly capable of protecting itself and stopping employees or directors from harming it and boosting the competition. An injunction stopping someone from competing with you is a pretty powerful tool. It is however one of those few areas where I would say that proper advice is needed from the start, and throughout any departure of the employee in question, because there is a fine legal line between protecting investment and waged slavery.