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Is It Illegal to Poach Employees?

10th June 2022

Competition is healthy for any business, encouraging your team to stay innovative, hungry, and ahead of the curve.

However, there are instances where company rivalry can potentially be taken a step further. You and your competitors may be vying for the same clients, partners or even employees. After all, you want to work with the best to be the best. Which begs the question: Is it illegal to poach employees? Or just unethical?

A common occurrence in the corporate and business climate, stealing or poaching staff is nothing new. Whether it be to gain a competitive edge, obtain confidential information, or simply have one over your rival, employee poaching occurs far and wide across many Australian occupations and industries. 

Here at wilson/ryan/grose, our expert employment team are here to break down the legalities surrounding poaching employees. With over 125 years of providing exceptional legal services to Townsville and Queensland businesses, we have the experience, knowledge, and skills to ensure you’re well-equipped to handle any employment concerns. 

Let’s start with the basics:

What Is Employee Poaching?

Employee poaching refers to the process of targeting and ‘poaching’ (taking) an employee from another company for your own company. 

When an employee displays highly sought-after skills and experience, it’s not uncommon for this kind of talent to attract the likes of others in the industry. Generally speaking, employee poaching occurs when a company directly approaches an employee of one of their competitors. Employee poaching is also relatively common in instances where a company client may offer an employee an opportunity to work for them directly or when a previous employee poaches a current employee to come and work with/for them elsewhere. 

Is It Illegal to Poach Employees?

So, is it illegal to poach staff from your competitors? That depends. One thing that we will say is that poaching an employee is a risky business. When it comes to approaching a competitor’s employee for work, there are serious legal implications for both the employer and the employee to consider.

For starters, if the staff member in question has an employment contract with a restraint of trade clause, this may prevent the employee from working for a direct competitor. A restraint clause may state that the employee cannot work for competing companies, within a certain area or for a certain period of time following termination of their employment. 

Secondly, employees are prevented from sharing confidential information with third parties, even if an employment agreementhas not been signed. Confidential information includes client lists, target client lists, business plans, financial information, code, trade secrets, concepts, processes, and knowledge. 

Poaching Employees from Other Companies: What You Should Know

Is it illegal to poach employees from my competitors? No. However, if you want to hire an employee directly from your competitor’s team, there are a couple of things you should consider:

  1. First of all, ask the employee whether or not they have any restraint clauses in their contract with their current company.
  2. Secondly, it’s important to seek advice on the implications of poaching, including the potential restraint of trade clause.
  3. Understand that the employee cannot and should not share confidential information with your company or team.
  4. Consider whether or not the hire will be worth potentially severing a relationship with this company. There’s also the chance that your business will earn a reputation for poaching other’s employees. 

Preventing Other Companies from Poaching Your Employees

If you’re in an industry that operates with employees specialising in technical skills, you have possibly experienced employee poaching in some way or another. One way to prevent this from occurring from your own business is by creating and nurturing positive, close relationships with your staff members to ensure they know they are a valued asset to your company. Fostering an open-door, fair, and healthy working environment will go a long way in keeping your employees satisfied and shut off from considering opportunities from a competitor’s company.  

From a legal standpoint, you can prevent employee poaching by including comprehensive and legally enforceable restraint of trade clauses as well as confidentiality and non-disclosure provisions in your employment contracts. Restraint of trade clauses are used to regulate an employee’s conduct during and after employment with a company. Some clauses of such restraints may include: 

  • Restraining former employees from sharing confidential information following termination
  • Restraining employees from working for competitors in a geographic location for a set term 
  • Restricting an employee from poaching any other employee to work with your competitor in the future 

Speak to An Employment Law Team 

Whether you currently have an employee breaching a clause of restraint, or you’re about to take on a competitor’s staff member, and you wish to seek advice, it’s important to work with an employment law team that you can trust. With over 125 years’ operating as Townsville’s leading law firm, wilson/ryan/grose are here to help. Get in contact with our employment law team today to learn more about how we can assist with your concerns about employee poaching. 

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