2023 General, news, etc, page-146

Sabine

Drafting and editing contracts was a substantial part of how I earned my living for the decade before I retired, and a consultancy firm asked me to run my eye over an employee-sourcing contract that included supplying subcontractors to work on projects for EDS, who themselves were a contractor to a large organisation. The draft had so many minor flaws in it that by the time I marked them with a yellow underliner, it looked like a poorly scrambled egg. I then created a clean copy, and slipped a provision in to the effect that if EDS hired an employee away from the employee-sourcing firm, it had to pay a fee of one year's salary, or something similar that I thought could be justified in a court of law if EDS were to contest the matter on the basis of restraint of trade. Whether that provision was enforceable is moot, but it did no harm  to the employee-sourcing firm to have it in the contract. Generally, all agreements to a restraint of trade are presumed to be unenforceable, unless the restraint is shown to be reasonable. Also, contracts cannot contain penalties that exceed actual harm suffered by the non-breaching party.

My non-professional view is that if a client were to hire an employees away from a service contractor, a provision reimbursing the service contractor's actual resulting loss would stand a reasonableness test. The provision must not be seen as a penalty, and the actual cost of finding a replacement. and inducting the replacement to a reasonable level of comparable skill could withstand contention. The real point of inserting that provision in the contract was to dissuade EDS from poaching staff from the service provider. When I asked my friend some two years later what had happened to employee X, he said that she had resigned to join EDS, so I reminded him of that provision (which he had forgotten it was there). I suggested that he not pursue the matter, but point it out and in a gesture of magnanimity, waive any claim, and thus enhance the goodwill that he enjoyed with EDS. That is what he did.

When you next have tea and crumpets with Jules you might suggest that he consider such a contractual provision. It is much more likely to withstand a forensic joust than would a provision applicable to an employee contract. I deliberately used the word "forensic" to pander to your penchant for words and things pertaining to Latin - the word is derived from Latin forensis ‘in open court, public’, from forum. Forensic, to be pedantic, should be understood to mean pertaining to court cases.