Employee Poaching: How to Handle Competitors Stealing Talent?

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In an era of exponentially growing demand for experienced specialists in various fields, access to developers, digital marketers, lawyers is crucial for gaining and maintaining a competitive advantage in the market. However, when professionals start to become scarce, companies look for a way to ‘poach’ such an employee from their rivals. We explain what employee poaching is, whether it is legal and, above all, how to effectively defend against it.

What is employee poaching?

Employee poaching is the practice of recruiting professionals by trying to “poach” them from another company. The aim of employee poaching can be both to strengthen one’s team and to weaken potential competitors by taking away key resources in the form of know-how held by the employee. This is particularly relevant in niche sectors that are emerging and highly qualified specialists in a particular field are simply in short supply, such as artificial intelligence training.

Is employee poaching legal?

At first glance, employee poaching is perfectly legal – an employer looking for a new team member publishes an announcement on its website, an open portal or sends a direct message to the person in question, in which it sets out its expectations from the candidate. In principle, any person has the right to participate in the recruitment process, so there is no violation of the law in any way. In this way, the constitutional principle of freedom of choice of both profession and place of practice is implemented.

Nevertheless, it is important to realise that much depends on the circumstances in which such ‘poaching’ is carried out. It may lead to a breach of the contract binding the employee in question to the employer, but also of the business relationship with the contractor (increasingly, contracts provide for various types of non-compete clauses, including a non-poaching clause).

Regardless of possible legal restrictions, employee poaching is judged differently from a corporate ethics point of view. For companies focused on achieving maximum efficiency, it will be an acceptable, even if aggressive, strategy aimed at increasing their own resources. For others, it may represent a blemish on organisational order.

It is worth noting that sourcing employees from outside is sometimes seen as a way to save money. Otherwise, the employer would have to invest in the development of existing employees in order to continually increase their competences. Such an approach potentially leads to a weakening of team bonds and a fading perception that the company is responsive to the needs of its team, which is simply replaced by new people.

How to prevent employees from being snapped up?

Following the adage ‘prevention is better than cure’, the best results will come from entering into agreements with the employee to reduce the risk of moving to a competitor. Let us look at the mechanisms used in B2B relationships. It is worth remembering, however, that the Labour Code also provides for provisions providing similar protection. Which contracts will be particularly useful?

Non-competition agreement

A classic instrument used to secure the loyalty of an employee. A non-competition agreement can apply not only for the duration of the relationship, but also after its termination. Elements of a non-compete agreement include:

  • the definition of the concept of engaging in competitive activities;
  • the duration of the non-compete;
  • remuneration in return for compliance with the non-compete;
  • sanctions in the event of a breach of the non-compete.

The issue of consideration in the event of a non-compete is controversial in the case law. While for an employment contract the provisions of the Labour Code leave no doubt that a non-compete must be payable, for B2B contracts this is not so obvious. Therefore, when entering into partnerships with key employees, it is worth considering granting an allowance in exchange for refraining from moving to another company.

Non-Disclosure Agreement (NDA)

Another defence mechanism is the Non-Disclosure Agreement, which is an agreement that obliges the employee to keep information that is a business secret. This ensures that even in the event of a takeover of a specialist, the former employer protects its trade secrets. Like the non-compete, the NDA agreement can also be concluded for a period of time after the termination of the cooperation. Its content should include:

  • the definition of confidential information;
  • the rules for the protection of this information by the employee and under what circumstances the disclosure occurs;
  • the duration of the prohibition;
  • possible remuneration;
  • the sanction for breach of the NDA.

In contracts, precision is very important. It is not possible to simply indicate that all information that an employee has obtained in the performance of his or her duties constitutes a business secret. It is worth referring to specific documents, databases, files or business plans.

Does a training contract solve the problem of poaching?

The Labour Code provides for the possibility of concluding a training agreement with an employee. Under such an agreement, the employer has the right to oblige the employee to remain in the employment relationship with him/her for a maximum of 3 years. Will such a solution work as a way to fight poachers?

Unfortunately, only to a limited extent. The limited usefulness of training contracts is due to the fact that the employer cannot, in this case, set sanctions at any level to discourage rash decisions. Pursuant to Article 1035 of the Labour Code, in the event of early termination of the employment contract on the employee’s initiative, only a proportionate part of the expenses incurred for the employee’s training can be claimed.

Non-poaching agreement with a contractor

Yet another solution is to enter into an agreement with a contractor whereby the contractor undertakes not to contact the employees of the company in question directly. Of course, this does not constitute protection against posting job advertisements online or on the company’s website.

Employee poaching as an act of unfair competition

What can an employer do if it has failed to safeguard its interests through appropriate contractual provisions and begins to lose employees? It is possible to refer to the provisions of the Act on Fighting Unfair Competition.

Pursuant to Article 12(1), it is considered an act of unfair competition to induce a person providing work for an entrepreneur, on the basis of an employment or other legal relationship, to fail to perform or improperly perform his/her employment or other contractual duties in order to benefit himself/herself or third parties or to harm the employer.

Thus, if the company bouncing the employee starts to contact him and persistently persuade him to breach his contractual obligations by deliberately lowering the quality of the work provided, such action may be treated as an act of unfair competition.

From the point of view of employee poaching, however, of more interest will be the second paragraph of Article 12 of the Anti-Competition Act, where it is deemed unfair to induce the entrepreneur’s customers or other persons to terminate a contract with the entrepreneur or to fail to perform or improperly perform it with the aim of benefiting oneself or third parties or harming the entrepreneur.

In both cases, the legislator requires that the action on the part of the employee is triggered by an ‘inducement’ on the part of a third party. Thus, if a company sends emails to an employee suggesting better terms and conditions of employment and, furthermore, denigrating the current employer, such an action may attract certain sanctions.

However, the case law points out that it is not enough to simply persuade an employee to change jobs. The circumstances of such behaviour, but also the manner in which the company persuades the employees, should indicate the existence of motives justifying the recognition of the action as an act of unfair competition.

It should be noted that unfair competition lawsuits are often risky. This is because an employee who has already made the decision to change jobs will generally not be able to provide a source of reliable evidence of, for example, correspondence between him or her and the company looking for a specialist.

Fighting employee poaching is not easy, but it is certainly possible. However, it requires careful and thoughtful construction of contracts. It is easy to make a mistake which, in the event of a dispute, will render the entire NDA or non-compete agreement invalid, giving only a false sense of security.