Non-Poaching Clauses
Non poaching clauses are a type of restrictive covenant.
They're used to protect a business from contractors, employees and sellers of businesses from employing or contracting with the employees, contractors and consultants still doing business with the protected company for a period of time after the engagement ends: post termination of the employment or consultancy agreement.
Default Position in Law
Ex-employees, ex-contractors, ex-consultants (as individuals and companies) - have the right to work for any business they want to work for, if the employer or business will have them.
It's that simple.
Non-poaching clause create a contractual right which interferes with that fundamental freedom.
To be effective, non-poaching restrictive covenants need to protect the legitimate interests of the protected company, and go no further.
Non-poaching agreements between two companies are just as enforceable as an agreement between a company and an individual.
Scope of Non Poaching Clauses
So non-poaching clauses prevent employees and consultants from reaching back into the protected business and engage employees and consultants with their new business.
They prevent hiring of those individuals or companies, and then only for a limited period. They’re geared to protect the workforce and supply chain of the protected business.
Sometimes entire teams move from one business to another, some by their own design or by an invitation from a new business they join. And they're perfectly entitled to when no non-poaching restrictive covenant applies to prevent that movement.
Unenforceable Non Poaching Clauses
No poaching clauses aren't enforceable when they include all employees and customers of the protected business such as those that joined the protected business after the employee or contractor left it.
Non-Poaching Clauses v Non-Solicitation v Non Dealing clauses
There are differences between non-poaching Clauses and other restrictive covenants, because each focuses on fundamentally different acts and behaviour.
Many of the factors which come into play for non-solicitation clauses and non-dealing clauses apply with non poaching clauses.
Example Agreement: No-poaching clause
You will not from the date of termination either on your own account or as a representative for any other person for a period of 6 months interfere with, solicit or endeavour to entice away the employment of, employ or negotiate or arrange the employment or engagement by any other person, of any person who to your knowledge was in a managerial, or executive of the Protected Business whose departure would damage the Protected Business and with whom you had personal dealings during your engagement.
Senior Positions vs Junior Positions
Non poaching clauses are one of those types of contract clauses where simplicity is not necessarily the best approach. Simplicity can work against the employer's intention, by not catering for the specific circumstances of the particular employee or consultant.
Non poaching clauses which may work for senior employees or consultants, or those with many customer contacts or trade connections are far less likely to work with junior employees in a large business who has minimal contact with those outside their immediate department.
Restrictive Covenant Solicitors
Restrictive covenants describe a suite of types of contract clauses which apply when a contractual relationship comes to an end. Not getting them right for the enterprise means that they won't be enforceable, and at best difficult and expensive to enforce.
We have advised on all sorts of restrictive covenant and non poaching clauses, and can help your business get a proper focus on whether it is enforceable or not.
To speak to a specialised contract solicitor that advises on restrictive covenants and non-poaching clauses, email us at contact@hallellis.co.uk or telephone us on +44 20 7036 9282 for an initial chat.
Related:
- Restrictive Covenants
- Non Dealing clauses
- Non Solicitation clauses
- Protection of Goodwill: Passing Off
- Protecting Confidential Information
- The Law of Passing Off: Protection of Goodwill