It’s given the back pages a new lease of life in the lull before the new football season. With every passing day, it seems the Ashley Cole saga takes another turn.
At time of writing, Cole has appealed the Premier League’s decision to fine him 100,000 over the ‘tapping up’ case with Chelsea and vowed to take the matter to the legal equivalent of the Champions League, the European Court of Justice. It may barely be half time in this particular encounter.
In the increasingly surreal world of top-flight football, Cole’s situation is perhaps not typical, not least because of the Premier League’s specific rules on transfers. But ‘Colegate’ (as the tabloids have inevitably labelled it) raises some interesting employment law issues. First, what is the position of employees who want to leave their current employer? What can and can’t they do? What can employers do to stop them? Second, what about ‘tapping up’ (as they call it)? What are the pitfalls for an employer trying to hire someone else’s employee?
The law recognises that employees can ply their trade with whoever they wish. Employees are not bound to their employer. So if employees want to leave, in many ways that is the end of the matter.
However, there are a couple of exceptions. Employees must, while employed, act in their employer’s best interests. If an employee competes against their employer during their employment or uses work time or facilities to further their departure to another employer, they are likely to breach that duty.
A further exception is, if, during his employment, employee A encourages colleague B to leave with him. This would likely be not only a breach of the implied term in A’s contract to act in his employer’s best interests but, depending on the circumstances, A could be unlawfully inducing a breach of B’s employment contract (see below).
What can employers do in such circumstances? One option is to discipline the employee. However, a departing employee is unlikely to care, except where disciplinary action impacts on benefits such as share options or discretionary bonuses, or if it relates to fitness or propriety for those employees regulated by the Financial Services Authority. An alternative is to seek an injunction. However, costs are likely to be considerable so this is only really an option for key employees.
Of course, employers can aim to limit the damage done by departing employees. If permitted under the employment contract, one option is ‘garden leave’ (serving notice but requiring the employee not to come to work, thus lessening the employee’s ability to solicit clients or colleagues or take confidential information).
Another possibility is the use of protective covenants: a promise by the employee, after the employment relationship has ended not to, for example, compete against the employer or solicit employees or clients. Although much used and having a clear deterrent value, such restrictions must be carefully drafted to be enforceable.
Such legal protection, while useful, is merely damage limitation. The employer should try to limit departures by a well-thought out key employee retention strategy and a regularly updated succession plan.
What about hiring someone else’s existing employee? This will generally be lawful. The exception is where the hirer induces a breach of the employee’s current employment contract. For example, if the employee has a six-month notice period and the new employer attempts to get the employee to start before it expires, this could amount to inducing a breach of the employment contract. But if an employee of their own accord broke their contract, or if an early departure was agreed with the existing employer, no breach would have been induced. Clearly, proof of who said what will be important.
This will be just a technical legal risk if the sums involved are small. However, the former employer may consider bringing a claim if, for example, a high-value business area in which the former employee worked has been ruined by their sudden departure. Recruiting employers will often use an agency to make the initial approach. In general, this is unlikely to change the legal position, as the employer will probably be liable for the agency’s actions. Employers should ensure that the scope of instructions to agencies is clear.
The rewards of recruiting a rising star from a competitor can be diminished if HR professionals do not seriously consider what obligations are owed to an existing employer. As for the Ashley Cole affair, it is likely to be a thriller with the final score far from certain.
Christopher Braganza is an employment lawyer with Allen & Overy LLP