When considering moving companies, employees do still have a duty of care to their existing employer during interviews and the entire recruitment process.
We asked leading human resources lawyer, David Hunt, a partner at Farrer & Co, to give his advice to employees and employers about this process. This is the first in a series of articles which we hope will be of interest to you, as an employee.
Part 1 – Interviews
Under English law, employees owe an implied duty of confidentiality and an implied duty of fidelity to their employer. These duties are then normally reinforced or extended by express terms in an employee’s contract of employment.
Senior employees can also, in certain circumstances, owe fiduciary duties to act at all times in the best interests of their employer. Breach of any of these duties can result in dismissal, injunctive action and/or claims in damages or, in the case of a breach of fiduciary duty, a claim for an account of profits.
This article on interviews is the first in a series looking at some of the do’s and don’ts for candidates who are considering leaving their employer, both in terms of acting in accordance with their legal obligations but also ensuring that they leave in a way that is dignified, respectful and does not, at least unnecessarily, burn bridges.
Interview Process with a Prospective New Employer
It is legitimate for a new employer to ask you, and for you to volunteer, any of the following:
- Information about your own qualifications and qualities, and about the areas of training you have received;
- An explanation of the nature and extent of your experience and expertise gained with your existing and any previous firm, so that it is possible to judge what level of responsibility could be taken on;
- Details of your specific role in transactions which are themselves public knowledge (this would be to gauge your level of experience and expertise – not to obtain private details of the transactions) and general information about personal relationships with individuals at known clients;
- Your current remuneration etc (unless that is subject to a specific confidentiality obligation, in which case it is still legitimate to ask about financial expectations in order to move);
- Your general opinions as to the market in which they operate, including your views as to market prospects but not your present firm’s prospects;
- Any information that is in the public domain relating to your current firm; or
- Your views on the benefits, which you could bring to a prospective employer, but not details of particular opportunities that you know about only because of your current role.
Information You Should Not be Asked in Interviews
During interviews, you should not be asked for and should not volunteer any confidential information in relation to your current employer. This includes;
- confidential actual or prospective client or transaction details,
- financial/budgetary details,
- costs/profit margins,
- staff details (eg name, remuneration or relative strengths and weaknesses),
- methodologies or innovative products/services which would be regarded as a trade secret, or
- any confidential details about your existing firm’s strategy or plans
Clearly an exception to this is where any of the above is in the public domain (eg trade press, conferences) or, where the relevant details are already known by the interviewer (unless the interviewer has somehow wrongly obtained those details).
Business Plans
It is perfectly legitimate for you, at the interviews stage, to be asked for and to produce a basic business plan of how you would propose to develop a new business if appointed to the new employer. However any such business plan should not include any confidential information emanating from your current firm nor should it include or be based on assumptions of any conduct which would be a breach of your legal obligations.
So, for example, a business plan which contains budgetary projections based on overheads of an existing team of colleagues joining together with revenues incoming from a client following and using the financial modelling in use at the your existing firm, will be direct evidence of a breach of duty on your part. Any business plan should therefore be of a sufficiently general nature that it would not prove embarrassing if it were to be produced in evidence by your existing employer.
Internal Discussions
You should not discuss your own recruitment process or details of the interviews with any other member of your current employer. It is likely to be a serious breach of an employee’s duties to take any steps to encourage colleagues to leave their existing employer. Senior employees may even be under an obligation to report to their current firm any knowledge they have acquired about threats to its business (which would include any plans of which they were aware whereby staff members were planning to leave to join a competitor). You should therefore only concern yourself with your own individual position and not anyone else’s.
You should not discuss your potential departure to join the new employer with their clients with a view to ‘sounding them out’. Almost certainly, if this comes to light it will be deemed to be a breach of your obligations to your existing employer as it will be interpreted as teeing up the client to switch advisers.
You should disclose to the new employer during the recruitment process what your period of notice is, whether you have any concerns about being penalised on bonus/stock etc as a result of leaving and what post leaving restrictions you have in your contract (e.g. non-compete, non-deal, non- solicit of clients/staff).
Coming Up…
We hope that has been a useful summary. In future articles, we will be looking at handing in your resignation, your notice period and gardening leave and joining your new employer.
In the meantime, take a look at our current opportunities to find out about the exciting roles we have available with wealth managers, private banks and family offices.
