Team Move - The Potential Liabilities of the Team Head

When a number of employees are considering to leave their employment together and set themselves up in competition with the employer, they have to be aware of their implied duty of fidelity apart form their contractual duties and restrictions. This article will discuss certain acts and omission in relation to "team move" which may give rise to a breach of the employee's implied duty of fidelity.

Implied Duty of Fidelity

A contract of employment may set out the basic terms of employment. However, very important duties of an employee (e.g. duty of fidelity) will be implied by legislation and /or decision of the courts which also govern the employment relationship.

An employee's implied duty of fidelity can be broadly interpreted to mean an employee's duty to act loyally, in good faith and in the best interests of his/her employer's business. Duty of fidelity also includes honesty, obedience, diligence, competence and care.

Team Move

The success of a company depends on the specific knowledge, skill and connections of its key employees. It is very common for a company to recruit a whole team of employees from its competitors. For instance, a company may try to recruit a manager of its competitor and also make enquiries with that manager to see if other members of his team would like to join the competitor as well.

In such circumstances, the manager of the team must be very careful about what he can and cannot do under his contract of employment as well as his implied duty to act in the best interests of his current employer. Moreover, that manager also has a duty not to disclose any confidential information and trade secret of his employer.

Some employment contracts may contain specific provisions in relation to "non solicitation of colleagues" and "non competition" which govern the behaviour of employees if and when they are asked to approach their colleagues for a "team move". For instance, a contract of employment may stipulate that "An Employee should not solicit or entice away or endeavour to solicit or entice away any employee of the Employer" and "An employee should not solicit the custom of any person who is, or has been at any time in the previous 6 months, a customer of the Employer for the purpose of offering to such customer good or services similar to or competing with the Employer's Business." However, some employment contracts may be silent on the employee's obligations and restrictions in those respects.

In the absence of any...