When an Employee Decides to Move to a Client
Imagine you're working in the electronics industry for two decades, and recently you've been contemplating a change. An important client of the company you work for offers you to work directly for them. Sounds like a good opportunity, right? This is exactly what happened to one of our clients, who had worked for years with a major defense client. The problem began when his company saw this move not just as an innocent step but as a premeditated scheme. The employee, who was involved in all projects and knew all the contacts, moved to the client. The company sued him, claiming he used sensitive information and committed client poaching.
What the Law Actually Considers
Labor courts focus on whether the move was initiated by the employee or if the client approached them. If the employee was the one who reached out and offered better terms, this might be considered client poaching. Secondly, it's crucial to check if the employee used confidential information from the previous company. Knowledge about prices, projects, and contacts can be considered trade secrets, not personal skills. Finally, courts assess the damage caused to the previous company. If the transition caused financial losses or harmed the reputation, it could amplify the legal consequences.
When Is This Relevant — Checklist
- ✓Did the client approach you or did you initiate the transition?
- ✓Did you use internal company information to entice the client?
- ✓Did your move cause financial loss to the previous employer?
- ✓Did you talk to other clients about the possibility of moving?
The Specific Law That Applies
The Commercial Torts Law prohibits client poaching and the use of trade secrets of the previous employer. If your move is considered a violation, you might be required to pay compensation and even face an injunction. In case of a violation, courts can award substantial compensation and even issue an order preventing the employee from continuing to work with the new client. This law aims to protect employer rights and prevent damage to reputation and projects.
Questions Everyone Asks — But No One Asks the Lawyer
Real Situations — Which Side Are You On?
A tech employee moves to a startup directly competing with their previous employer. High potential legal risk. A project manager leaves for a large client they knew through their work. Specific circumstances need to be examined. A financial analyst moves to a bank where they were involved in secret projects. Here, there's a risk of a lawsuit for using confidential information.
What to Do Right Now
The first step is to review all agreements and contracts you signed with your previous employer. Don't sign anything before consulting with a lawyer. If you do nothing, you might find yourself exposed to legal claims and damage to your professional reputation. Seek legal advice to protect yourself.