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Legal Update

Poaching Employees - Beware the Springboard

10 November 2008
Mayer Brown JSM Legal Update

A recent first instance decision in the English court has raised the prospect of expanding the circumstances in which springboard relief will be granted to employers in the face of losses caused by a mass defection of staff members to a competitor.  This decision is at odds with recent High Court decisions in Hong Kong and introduces some uncertainty into this area which victims of such mass staff defections may want to test going forward.

Full Update

On 4 August 2008 UBS Wealth Management (UK) Limited was successful in its application for springboard relief against Vestra Wealth LLP and others in circumstances where there had been a mass defection of some 75 staff members from UBS to Vestra.

Springboard relief is a form of injunctive relief which has developed to prevent serious economic loss to a previous employer caused by former staff members taking an unfair advantage (or "unfair start") to a new employer, and operates so as to restrain the new employer from using the services of those departing employees for a fixed, sometimes extended, period of time - in the UBS case until trial of the complaint.  This jurisdiction derives from the 1987 English case of Roger Bullivant v Ellis when Nourse LJ stated injunctive relief would be granted to prevent departing employees from taking unfair advantage of the "springboard" which they had built from the misuse of information.

Previous authority in England (Midas IT Services v Opus Portfolio Ltd. and Balston Ltd. v Headline Filters Ltd. (No. 1)) and in Hong Kong (ICAP (Hong Kong) Limited v BGC Securities (Hong Kong) LLC and Others) suggested springboard relief was confined to cases where former employees had misused confidential information acquired during the currency of their employment.  However, the UBS decision suggests this equitable form of relief may now extend beyond that to prevent any future loss to a previous employer caused by staff members taking an unfair advantage of any serious breaches of their contract of employment.

In light of the fact we have conflicting first instance decisions on the availability of springboard relief, we are likely to see more aggressive attempts being made to secure such relief by plaintiffs hit by a mass defection of employees to a competitor.  How the Hong Kong courts are likely to resolve such claims in light of the decision in the UBS case remains to be seen and this is an area that would benefit from appellate court consideration to provide clear guidance as to limits of the availability of springboard relief.

JSM has a great deal of experience in advising on contentious and non contentious employment matters and would be happy to answer any questions you might have in this regard.  In the first place please feel free to contact our or or any other members of the Employment and Benefits team.

Learn more about our Hong Kong office and Employment & Benefits practice.

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