EM Law | Commercial Lawyers in Central London
What are team moves?
A “team move” is a scenario in which two or more employees who work in the same business decide to leave and either set up in competition with their existing employer on their own account, or join one of their existing employer’s competitors.
The loss of a team can cause significant damage to a business, because of the loss of a skill base, the loss of a profit centre, or the competitive threat the team members pose after they leave: the team will often plan to exploit existing customer relationships.
In team move situations the members of the departing team may well be in breach of their implied duty of fidelity (as well as other implied duties and any applicable express obligations), which will give their existing employer potential grounds to obtain springboard relief, as well as bringing other legal claims.
Identifying unlawful conduct in team moves
The first step for an existing employer on becoming aware of a team move will be to consider whether the members of the team, or the new employer, have committed any unlawful acts which could provide the basis for any legal redress.
Examples of express duties which may be breached in a team move situation are:
- Confidentiality clauses preventing the disclosure or misuse of confidential information (particularly, in this context, information relating to colleagues and customers).
- Non-compete provisions prohibiting employees from having any interest in a competing business during their employment.
- Duties of good faith/ loyalty and to act in the employer’s best interests, which are common in contracts for senior employees.
Examples of implied duties which may be breached in team moves are:
- Duty of good faith and fidelity.
- Fiduciary duties.
- Trust and confidence:
Inducing a breach and conspiracy
In addition to identifying breaches of express and implied terms by the team members, the existing employer will also want to consider whether the following torts have been committed:
- Inducing a breach of contract. This tort is committed where a person – in most cases the new employer, although it could be someone else, for example a recruitment consultant – has knowledge of contractual restrictions to which the team move individuals are subject, and an actual intention to induce them to breach those restrictions.
- This is committed where:
- there is an agreement between two or more persons;
- the means underlying the agreement are lawful but the real and predominant purpose of the agreement is to injure a third party, or alternatively, the means underlying the agreement are unlawful but one purpose of the agreement is to injure a third party; and
- acts done in execution of the agreement do result in injury to a third party.
Having assessed its potential legal claims, the existing employer will then consider the legal (and other) protective steps it can take to prevent or mitigate the damage from the team move.