Employment Law, is this Legal?

Question

A company gets a product from an international supplier in a very large contract. As part of this deal, the supplier signs a deal with the company not to employ any of their staff. A job comes up with the supplier with good wage, good prospects and career progression, that an employee within the company hears about, is more than qualified to do, and is very eager to take.
The employee is however blocked from applying for this role by the people he works for, and the supplier are nervous about any repercussions taken by the company as the contract is very large.
Is it legal for the company to block an employee from applying for this job? The employee is not being poached, hasn't been guaranteed anything and was unaware that such a restriction was in place. The company is therefore controlling the future prospects of the employee without their knowledge.
This surely can't be legal? Is this breaking any human rights/employment law?

Proper answers please. No stupid stuff(for once)

Answer 1

Unfortunately, for you, it is legal. It is sort of a "no poaching" or "Headhunter" agreement the companies have with each other. It has been in effect for at least a decade or longer. A lot of corporations now outsource and it is useful in keeping wages down, and still keep the best employees.

Sorry, it's how the business world functions these days.

Answer 2

Hi - this doesn't violate human rights law and in most cases, it doesn't violate employment law either. However, it should be the supplier's company that denies the employee's application, not the employee's current company.

It is legal, and in fact common, for agreements between companies to include a "no poaching" clause. What is sometimes not legal, depending on the location, is a company's right to prohibit an employee from seeking other work. Agreements between a company and an employee which limit where an employee can work post-termination, or prohibit an employee from working in a certain industry, may not be legally enforceable.

In this case, the supplier will not be likely to want to jeopardize their relationship with the company by hiring you. The company is obviously adamant about enforcing the terms of their contract with the supplier.

Could you sue them? Yeah - but even if you won, what would you get? A job with a supplier who's pissed off because you cost them a big account? A bad relationship with your current company, with whom you might have to deal in your new role?

Some things just aren't worth the drama - I'd let it go.

Answer 3

This is a really interesting question. I am not a lawyer but have come across various legal situations in the course of my accountancy and tax career. I hope you don't mind if I venture an opinion.

First we have a contract between a company and a major supplier. You say that this contract stipulates that the supplier may not employ any of the company's staff.I would suggest that the contract probably stipulates that the supplier does not poach any of the staff but it is possible that your interpretation is correct.

I have a feeling that this clause could be challenged as unfair insofar as it covers all employees, not just critical ones. But this is not really the point of your question.

The employee is not blocked from applying for a job providing there is nothing about this situation mentioned in his contract of employment. So, assuming there is nothing mentioned in the contract of employment I doubt the company is breaching any human rights legislation.

The problem is that the supplier appears to be in an unenviable situation. I am sure that he will do his best to ensure that a good reason is found to reject the candidate. If so, could this decision be challenged?

I suspect the answer is yes which is why I did not think the contract between the company and the supplier was so black and white. The supplier should be left the defence that poaching had not taken place. But this could be difficult to prove.

Answer 4

Yes it is legal. The supplier signed a contract and the supplier must abide by the contract or lose the business. Companies are allowed to contract for any type of agreement. Since you are not party to this contract you have no standing to fight it. Employment law allows this in all states.

In addition, many employees sign 'non-compete agreements' which forbids them from being hired by suppliers, competition or any other group that the employer lists. Courts hold that type of agreement to be legal.

Answer 5

I am aware of no laws being broken. Your employer does not have to get your approval of any agreements. If the employer built this into their contract, and the supplier hires you they are in breach of contract.

The employer has the right to protect their employees from being approached by the supplier. While that did not happen in this case, how can they be sure. If the supplier wanted you, they could post the job and approach you out of the office. Then talk you into "filling out the application" and act surprised that this happened.

Your employer probably has this as standard based on something that happened in the past and they are trying to prevent it again.

Surely there are other jobs out there for you.

Answer 6

In certain professions there can be restrictions on where you work, eg a hairdresser may have to sign an agreement that once they set up on their own they will not work within x miles of their current employer (to preserve your clientele) But Ive never heard of not being free to apply for a job with a supplier. However it seems logical that a supplier may agree to not poach the companys staff, that would be unethical, but in this case their was no poaching going on

Answer 7

Yes, they can, provided that they are doing so for the right reasons. Those reasons could include: -we've changed the definition of the job; it is really only a part time role. We don't need this position full time. -our business is declining and we're cutting several positions back to part time (or we're having financial problems, etc.) to save $$ on benefits and pay. Reasons that they CANNOT do this include: -this employee made a complaint about something and now we're going to punish her. -this employee just had a baby and we assume she wants to spend more time with her family now -we don't like (black, hispanic, old, Jewish, whatever) employees so we'll give the full-time jobs to the (younger, caucasian, Christian) employes and move the less desirable folks into part time jobs. -this person's medical problems are costing us too much on our insurance premiums. If we move her to part time she won't be eligible for those benefits any longer. In other words, if its a business decision it's legal - if it is based in discrimination or retaliatory activity, it isn't. And you'd think they might have let you know it was coming, regardless.

Answer 8

This is not legal, it is restraint of trade.
This agreement would have been made by the companies who would know that they would be open to challenge in the courts.
Anyone in these circumstances could sue both companies in court for substantial damages and would win their case.
You have a very strong negotiating position within your company if you can prove that they are blocking you and that is the sticking point.
Sometimes companies are staggeringly ignorant of the law so it might pay to ask both of them the reasons for your failure to get the job and try to get their reply in writing.
If they answer that they have this mutual agreement you have them nailed.
If you can only get a verbal answer it would be down to a court to decide whom is being truthful.
At this point the company you applied to work for would have to satisfy the court that the chosen successful candidate was better qualified for the job than yourself.
See a solicitor, if you are in a trade union they will put you in touch with a specialist in the field.

Answer 9

Sounds tricky , but if the employee was to resign from his post with your suppliers and then a few weeks later apply for a job at your company , and you took him on , both you and the employee are in the clear.

Answer 10

I'm not aware of any law that would be broken as such. But in a way, it's irrelevant.
If you apply:
(i) Your current employer is not legally bound to give you a reference and would probably refuse.
(ii) I would imagine that the supplier, not wanting to risk losing the contract, will not employ you.