Employee poaching or job poaching is not new in workplaces. It happens when an employer solicits workers from other companies to work with them instead. While this gives more options to the solicited employee, this endangers the company that they are in. This commonly occurs if highly skilled employees are providing significant progress to their company.
This is disastrous for organisations especially if the solicited employee is one of their best employees. Indeed, an employer cannot prevent a competitor or rival company from presenting offers to their employees. However, employers may take precautionary measures to prevent employee poaching/soliciting and ensure their employees don't accept a new job offer.
Is Poaching Employees Illegal?
This question highly depends on the solicited employee's contract with a restraint of trade clause. A restraint of trade clause states that an employee may not work for competing companies for a specified timeframe after resignation. This clause may also regulate an employee's conduct during and after employment with a company. There are also contract agreements that prevent employees from disclosing:
- Client lists
- Target clients lists
- Company plans
- Financial data
- Codes
- Trade secrets
- Concepts and procedures
- Any other relevant confidential information
A confidentiality clause is another agreement in a contract that requires one or both parties to keep specific information confidential. Additionally, this clause should stipulate that upon leaving a job, the resigning employee must turn over all confidential information. A confidentiality clause also:
- Reduces a company's exposure to risk; and
- Makes the expectations and obligations of its employees clear from the start
How To Reduce Staff Poaching
1. Provide the Basic Needs in a Workplace Setting
An obvious way of preventing employee poaching is for employers to keep their employees satisfied and happy in the company. A former employee may have resigned from their current company because they might have better pay or amenities at a direct competitor's organisation. Employers should make sure that all of their basic needs are met in a workplace setting such as:
- Spacious work areas
- Break rooms
- Security (security guards and cameras in the workplace)
- Company events
- Up-to-date computers or devices
- Comfortable work desks and chairs
- Clinics
- Basic health protocols due to COVID-19 (temperature checks, antigen tests, or swab tests)
Note: Most of these basic needs won't be applicable if employees are working remotely or in a hybrid work-from-home setting.
2. Listen to Employee Concerns
Indeed, salary, benefits, and job duties are frequently cited as reasons for employee poaching. However, there are more factors on why employees tend to leave their companies. Employers should have one-on-one talks with their employees and let them discuss their issues, complaints, suggestions, or concerns such as:
- Issues with the management
- Evaluations for pay raises
- Colleague or supervisor disputes
- Workplace discrimination
- Issues with amenities
- Personal issues that are affecting their work-life balance
- Overall concerns, suggestions, and complaints about the company's management
Employees will feel more empowered if they know that their employers are listening to them. Although employers cannot immediately provide adjustments that will benefit everyone, listening to employees will prevent their staff from being singled out. Employers who listen and take proactive measures on their member's concerns can proactively prevent employee poaching.
3. Improve Company Culture
In an attempt to poach employees, an employer may tend to convince their competitor's employee that their company offers better work-life balance. Therefore, employers should ask if their employees have any concerns about the company's culture when listening to employee concerns. Is the management not upholding the values of the company? Do they have a healthy work-life balance? If employers want to promote good company culture they may also uphold some core values that reflect the company's culture:
- Success
- Passion
- Integrity
- Responsiveness
- Innovation
- Teamwork
- Accountability
- Discipline
- Perseverance
- Honesty
4. Conduct Exit Interviews
Exit interviews are conducted for resigning employees to enable them to smoothly transition out of a company. This is the formal process of terminating all duties and responsibilities of the employee to the management. An exit interview is a chance to directly ask departing workers why they are leaving and what could have been done differently. This way, companies can know the issues that they need to be mindful about when employing new personnel.
Employee Poaching: Case Example
In the case of Aussie Home Loans v X Inc Services (2005), we explore the enforceability of anti-poaching clauses in employment contracts. Mr Kolenda worked as the state manager in Aussie Home Loans in Victoria for more than three years. However, Mr Kolenda left his position on June 10, 2004, and started a new company while soliciting loan writers from Aussie Home Loans.
However, Aussie Home Loans argues that Mr Kolenda's contract restrained him from soliciting or enticing employees away from their company. The clause stated that he wasn't allowed to do this for a period of 12 months following his resignation. Aussie Home Loans moved to enforce the clause in the Supreme Court of New South Wales to stop Kolenda's plans.
Court Findings
The judge then applied rules that concerned the enforceability of restraint of trade to ex-employees to the clause in Mr Kolenda's employment contract. Mr Kolenada also had access to confidential information about interactions between the former company and its employees such as their:
- Backgrounds
- Commission rates
- Skill sets
- Personalities
As a result, the judge came to the opinion that a ban on employee poaching is appropriate. However, the judge believed that Mr Kolenda's contract went beyond what may be seen as appropriate to preserve the privacy of such information. To be specific:
- All employees and contractors of Aussie Home Loans were subject to the provision. The condition did not only apply to loan writers with whom Mr Kolenda had a personal relationship or responsibility.
- The clause is applied in all states and territories in Australia. However, Mr Kolenda exclusively interacted with Victoria-based employees.
- The 12-month period of the restraint was excessive, given the one-week duration of notice periods in the loan writers' contracts. This indicated that the parties wanted loan writers to be able to easily switch to other brokers. Furthermore, a 12-month constraint was unreasonable given that Mr Kolenda's job was terminated within one month's notice.
The judge then dismissed the plaintiff's claims and ordered them to pay Mr Kolenda's costs.
Do You Need Legal Advice?
JB Solicitors can aid in employment law matters that include employee poaching or employers who are wrongly accused of it. Our seasoned lawyers can help with civil dispute litigations and help disputed parties come to an amicable agreement. We can also draft employment contracts and include legal clauses that help prevent employee poaching.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.