Until recently, employers have been preoccupied with cutting costs and managing redundancies. But the signs are that in the future they will be more concerned with clinging to employees, as part of an effort to retain client confidence and protect confidential information.
The City has witnessed a spate of poaching recently, with entire teams of market analysts shuttling between leading merchant banks and stockbrokers. And the problem is not just a British one. General Motors is still smarting from the departure of seven executives who left to team up with their former boss, Jose Ignacio Lopez de Arriortua, at GM's German rival, Volkswagen.
Employment Covenants and Confidential Information (published by Butterworth) is a collaboration between Kate Brearley, a partner with the City solicitors Stephenson Harwood, and a barrister, Selwyn Bloch.
Their inspiration came from a period working together on cases involving confidential information and restraint of trade.
The authors say their objective was to explain the issues not only to legal practitioners, but also to those outside the profession.
The book is split into two parts. The first deals with the relationship between employer and employee. This includes a helpful analysis of the factors that must be taken into account in deciding whether an employment relationship actually exists.
It is followed by some considerations of the implied obligations that such a relationship imposes on the employee.
The practical legal experience of the authors contributes to discussion of a wide array of potential problems that might confront employers. These include such issues as employees' duty to disclose misconduct, and steps they can take to set up a competing business while still working for an employer.
The chapter analysing the duty of confidentiality is likely to be well-thumbed by lawyers. Careful consideration is given to the difference between confidential information, which is protectable (either by implication or by means of express restrictions), and skills and knowledge, which are not.
As the book explains, although an employer has a degree of implied protection against employees' transgressions, there can be no substitute for express protection enshrined in a contract. A battery of precedents are provided, with a helpful explanation of their intent and effect.
Away from the technical legal jargon, a chapter is devoted to keeping employees happy, as one of the most effective ways of protecting confidential information and client contracts. The authors recommend regular assessments as well as performance-related pay.
The suggestion that employers also need to recognise staff require leisure time is likely to raise a wry smile among solicitors in a few City law firms - assuming they have time to read the book.
The second half concentrates on the relationship between employer and former employee. There is a useful examination of the doctrine of restraint of trade. Restrictive covenants vary according to employers' concerns. Typically, they will include provisions prohibiting competition and the solicitation of clients or employees.
Such clauses will only be enforced by a court if it is satisfied the employer has a legitimate interest to protect, such as confidential information or tangible business connections. In addition, the restrictions imposed to protect those interests will only be enforceable to the extent that they are reasonable.
Finally, the book deals with employer remedies, including suing for damages, accounting for profits and obtaining injunctions. There is an interesting section on the Anton Pillar injunction - the 'hydrogen bomb' in the ex-employer's armoury that allows an employer to enter a defendant's premises to search and seize documents and other articles. Such orders are only permitted where there is a real possibility the ex-employee might destroy such property.
The book has one weakness that is not of its own making: it was published before the Court of Appeal decision in Hanover Insurance Brokers Ltd v Schapiro. This important case has, on one interpretation, done away with restrictive covenants drafted for the purpose of restraining former employees from soliciting an employer's staff.
But this aside, the book's arrival is both welcome and timely. Its ability to deal with complex matters in an easily understandable and practical fashion makes a further edition a virtual certainty.
Ian Hunter is an assistant solicitor at Fox Williams
(Photograph omitted)Reuse content