Poor redundancy strategies and increased demand for key personnel to give businesses a competitive advantage have contributed to an upturn in corporate talent poaching, according to Birmingham law firm Gateley.
But the firm says businesses are now more prepared to fight back, citing a significant rise in the number of cases being brought against those breaching the terms of their employment contracts when joining rival companies.
Lawyers in Gateley’s Birmingham office have seen a 25 per cent increase in fees generated from restrictive covenant cases in the last six months alone.
And it is a trend that looks set to continue according to partner Steve Goodrham, who heads up the firm’s commercial dispute resolution team in England.
“The instability resulting from the increase in organisational restructuring has left many employees feeling vulnerable and demotivated,” he said.
“If you factor in the pay freezes and salary cuts that are still being implemented in some companies, then you can see why businesses are finding themselves more exposed than ever to competitor approaches towards their staff.
“We have seen a marked increase in cases where not only specific individuals but also entire teams have been targeted. It’s become an even more competitive market for recruiting senior talent and with the risk of important clients moving across with ex-employees, it would seem businesses are beginning to take a firmer stance in protecting their commercial interests and enforcing restrictive covenant clauses.
“Business heads understand the need to invest in top talent even against a backdrop of economic uncertainty, and to ensure they are in the best position for the future.
“This has led to more senior level hires and inevitably with that trend comes a spike in poaching from the competitor talent pool.”
Mr Goodrham cited the controversial cross-city move of Alex McLeish from Birmingham City FC to Aston Villa as a prime example.
“This put the legal consequences of leaving one employer to work for a competitor firmly in the national spotlight,” he said.
“But these incidents are not just restricted to the world of sports management, it’s happening more and more in the corporate world and particularly in highly competitive fields, where talent is at a premium.”
He added that businesses could seek to combat the problem by having well drafted restrictive convenants included in employment contracts from the outset and tightly drafted garden leave clauses built in to limit competitive damage.