Insurers take legal action to stop rival recruiting their staff

A firm of insurance brokers has successfully taken legal action to prevent a rival business from recruiting its staff.

An interim injunction was granted to give the brokers more time to gather evidence that the rival had acted unlawfully.

The court heard that the brokers had lost 30 employees including senior managers from the fine art and jewellery section in London in a matter of days. An American rival admitted it had recruited the employees but denied that it had done anything wrong. It then offered to buy part of the brokers’ business.

The brokers refused and sought an injunction to prevent any more of its 30 remaining staff from being approached.

The judge at the first hearing decided there was no point in granting the injunction because the heart had already been torn out of the business and the remaining employees were of no particular attraction to the Americans.

The brokers appealed saying the judge was wrong to consider that the remaining employees were of no interest as some of them had since been recruited. The Americans submitted that in order for an injunction to be granted there needed to be evidence of wrongdoing, but there was no such evidence.

The Court of Appeal ruled in favour of the brokers. It held that the judge had been wrong to infer that there was no risk that the American firm would try to recruit more employees. It was important that the brokers maintained their staff so they could rebuild their business.

The American submission that evidence should be produced to show there was wrongdoing would be compelling if the brokers had been seeking a long injunction, but they simply wanted temporary relief to hold the line until further evidence could be produced.

It was therefore appropriate to grant an interim injunction preventing more employees being approached.

Please contact John Carter if you would like more information about the issues raised in this article or any aspect of employment law and protecting your business.