Australian firm fails to enforce two-year talent poaching ban
SYDNEY, AUSTRALIA — A professional services firm has failed in its attempt to enforce a restraint clause against a former senior employee, highlighting a growing trend of poaching disputes in Australia’s competitive labor market.
Mid-tier firm BlueRock sought a temporary injunction against associate director Sangeeta Kaushik, 40, who had left to take a partner role at consulting firm Nexia. The firm wanted to prevent her from soliciting clients for up to two years, as stipulated in her employment contract.
However, Justice John Snaden found that BlueRock’s evidence “falls short” of inferring that Kaushik intended to solicit former clients. The court determined that the firm’s concerns “do not rise beyond speculation,” even regarding a LinkedIn announcement about her new position that mentioned her “established portfolio of end-to-end client involvement.”
Labor market pressures fuel poaching disputes
Legal experts report a significant increase in poaching disputes across industries, particularly in financial services.
Baker & McKenzie employment partner Michael Michalandos noted “a massive spike in the financial services industry of poaching of senior executives or partners, and it seems to be a strategy increasingly being used by organizations to build their business.”
The tight labor market is driving this trend, with Michalandos adding, “There’s a bit of desperation in building revenue quickly. If an organization is spending large amounts of money on partners, there’s now an expectation that that comes with revenue.”
Legal landscape may change
The case emerges as Assistant Minister for Competition Andrew Leigh considers potential restrictions or bans on non-compete clauses and solicitation restraints.
Kaushik was represented by HWL Ebsworth partner Jonathan Nguyen, who observed that “in times of economic difficulty where the pickings are slim, employers are more readily prepared to enforce post-employment restraints, particularly where those employees are moving to a competitor.”
Justice Snaden also questioned the necessity of Blue Rock’s “unusually long” two-year restraint period, noting that the firm had already had three months to strengthen relationships with clients after Kaushik’s resignation.
