Ex-Employee and Vendor Partnering to Poach Clients: What Can I Do to Protect My Business?

Hello, I am running my own recruitment firm with 8 offices across the country, and I have some vendors who are also working with me. Now, one of my ex-employees and one of my vendors have formed a partnership with another person. They have been continuously approaching my clients, whom we have placed or who have been placed by my vendor and ex-employee. I have already given them a verbal warning as a human, but they are not willing to listen. They mentioned that this is the market, and they will approach clients, stating that I cannot do anything about it. What action should I take against them?

There are laws on theft of business data by persons holding confidential positions. Also, you should have had a clause in your vendor agreements about this.

Speak to a lawyer and see what you can do.

I haven't mentioned these terms in any agreement or appointment letter because he joined recently, and the vendor was known to me.

Well, I guess it's a lesson learned that you should include such a clause in the agreement. There isn't much you can do when you didn't have such terms in the agreement and when the person who betrayed you is "known to you." Still, consult a lawyer for the misuse of business secrets and see if there is anything that you can do about it.

Dear Sachin,

I suggest that you file a case against your ex-employee for breaching trust after consulting with your lawyer.

Like Nathrao and Saswata Banerjee mentioned, you should have included non-solicitation clauses vis-a-vis your employees, vendors, and I add, as well as your clients.

Handling the Issue

To address this issue, collect evidence to support criminal charges against your ex-employee. Check his official emails. I hope you have access to them through the servers. Generally, employees with such criminal intent forward emails to others through their official mail IDs. That would be proof enough to demonstrate criminal intent and the extent of damage (for all you know, some of your clients may also be on their list to poach later).

Points for the Future

In business, never make decisions 'through the heart.' Use your head, especially when those you know are involved.

I recollect a small story here: "When someone who got betrayed asked the betrayer of the trust reposed on how he could do it when he was trusted so much, the answer was: I could betray your trust only because you trusted me; if you didn't trust me, how could I manage to betray you at all?" The moral of the story being: Repose your trust after careful choices.

And like other members suggested, consult a lawyer ASAP to see if the damage is just what you know now or if there is something more coming later, basically damage control.

All the best.

Regards,
TS

Right to Earn and Practice Profession

The right to earn and the right to practice one's profession in a legal manner is a fundamental right. The market is not owned by you. Even multinational corporations like Microsoft were taught a lesson by various courts for practicing monopolies and restrictive trade practices. Please understand, it's a free world, and everyone has a right to do business. What matters is who is more effective.

I am sorry for being forthright, but the fact is, under what authority are you stating your ex-employee must not do business in the same line that you are in? Even if you add a restrictive clause in the letter, it will be thrown out if it is legally contested. It is a clause that is not legally tenable. There are umpteen court judgments, both in India and abroad, that any restrictive clause must come with compensation, which must be equivalent to at least what he can reasonably earn for the restrictive period. Please read the court cases of the COO of Titan starting Oyzterbay, or CEO of Adidas Indonesia joining Puma Hong Kong, or the CEO of HP joining Oracle.

So, please accept the fact that it's an open market and plan your strategies accordingly.

I do not think you can do much in the present case. However, for future appointments in your office, lay down a confidentiality clause and specify a penalty if the same is not upheld. When you introduce this clause, the choice of words is crucial; they must be legally sound. Consult a lawyer specializing in this area to help draft a standard appointment letter.