A recent court judgment highlights the risks involved in attempting to poach an entire team, particularly where in situ managers are used as recruiting sergeants.

The court held that BGC was liable for inducing and (with two BGC senior employees, one of whom had formerly been COO of Tullett Prebon) entering into an unlawful conspiracy to induce Tullett employees to leave in breach of their contracts. It was sufficient that BGC was indifferent to whether the employees breached their contracts, even if it didn’t intend the breach.

The court was prepared to enforce garden leave (and in some cases a combination of garden leave and non-compete covenants) for up to 12 months, and also upheld a 12 month injunction against BGC poaching any Tullett employees (including the prohibition on lawful recruitment).

The court also ruled that:

  • contractual provisions requiring employees to report to their employer any approach by a competitor are enforceable
  • a senior manager such as a broking desk head has a duty to report a proposed poaching raid of his team by a competitor and to follow his employer's instructions to prevent the raid
  • it is a breach of duty for an employee to disclose information to a competitor to assist the competitor to poach employees, even if that information is not confidential
  • the decision in RDF Media Group v Clements (recently followed by the EAT in Aberdeen CC v McNeill) that an employee cannot claim constructive dismissal if he has himself committed a prior repudiatory breach of contract is wrong; such a claim is possible, although the employee's prior conduct will be relevant in considering whether the employer has sufficiently damaged trust and confidence to support the constructive dismissal claim
  • Tullett could enforce contractual provisions requiring the employees to repay certain loyalty bonuses in this situation
  • in persuading three of the employees who had signed forward contracts with BGC to stay with Tullett (eg by offering indemnities against claims from BGC), Tullett had induced them to end those contracts; however, BGC's conduct showing a cynical disregard for the law and for employee's duties destroyed the three employees' trust and confidence in BGC as their future employer and entitled them to terminate the contracts.