Toronto Employment and Labour Law Blog: Poaching Employees for Fun and Profit.

Every great organization is searching for great employees. Talent is the new capital. Bricks and mortar have gone out of fashion since they hardly had any value to the enterprise. It is the search for and accumulation of first rate talent that turns a mediocre organization into a cutting edge engine whatever the field of endeavour. We have seen mergers and take overs buyouts and bankruptcies. The employees who are hurt are usually the middle managers and below. The most mobile of the top ranks of the executive are always in demand by competitor organizations. When your job is gone there is no risk in moving on to the waiting arms of the competitor. However, it is more difficult, legally and politically, to make the leap from your current job (whether under contract or not) to the competing employer while still employed. Companies are paranoid about losing their best employees to their competitor. As a result they attempt to tie up executive employees in contracts which contain non-competition agreements. Corporate employers attempt to tie down their most mobile and successful employees by imposing legal restrictions - the stick; and on the other hand providing stock options which vest every 2 or 3 years during employment – the carrot.

Companies in Canada are learning slowly that non-competition clauses will not be enforced by the courts when they are accompanied by a non-solicitation clause. That is if the company limits their employee from soliciting clients, suppliers, other employees, courts believe that is a sufficient restriction. A non-compete provision is contrary to public policy and will not be enforced. Highly mobile executive employees are always looking to see if there are greener fields outside their own pasture. As long as they can manage the contractual restrictions and the financial benefits make the departure worthwhile.

In the battle for brains there are few restrictions that money cannot overcome. If the employee’s contractual restrictions are not enforceable there is little hope for success in bringing an injunction to stop the fleeing employee from jumping ship. Therefore, it is risky for companies to rely on legal defenses and golden handcuffs if the rewards of leaving outweigh the benefits and limitations of staying.

If however, a competing employer has full knowledge that the employee that they are tempting to poach has an employment contract which the employee will necessarily breach when that employee departs from current employer and moves on to the enticements of the new employer that, in itself, may create a liability on the part of the inducing employer. The law of inducement is evolving so that if there is evidence that the inducing employer was intent on inducing the new employee to breach his/her contract there may be damages assessed not only against the departing employee for breach of contract but greater damages against of the would be new employer for inducing that employee to breach of his/her contract. This is a new area of legal restraint that may better restrict the poaching of employees by another company attempting to enhance their talent pool.

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