Exec headhunters under cloud

Tuesday, 30 March, 1999 - 22:00
Even headhunters have to watch their necks in this, the litigious age. Yes, the worldwide practice of poaching company executives is under scrutiny due to legal action against a top headhunting firm.

Headhunting chiefs are sweating on the outcome of the court case where American Federated Department Stores Inc is suing executive search firm Herbert Mines Associates for its role in snaring chief executive officer Matt Stern to Foot Locker Worldwide.

Federated Department Stores, as the parent company of Bloomingdale’s and Macy’s, swings enormous clout and is reportedly committed (cashed up) to seeing the case to the end.

Australian employment law specialist, Malcolm Davis, of law firm Middletons Moore & Jevins, says the case could mean headhunters are putting their heads in a noose.

The torts of inducing breach of contract and interference with contractual relations exist in Australia and could be used against a search firm if it influenced an executive to breach a term of his contract, he said.

The issue, being watched in Australia, made page one in a new national newsletter for recruitment professionals, Short List.

While most senior employment con-tracts are terminated when notice is served, there is a growing trend to include strong non-compete or non-disclosure provisions.

It is becoming more common for contracts to set time limits before an executive may work for a competitor.

Some contracts include limitations on industries or geographic areas in which executives can work.

Mr Davis said headhunting outfits could face legal action if they influenced executives to breach the terms of their contracts.

Another workplace issue becoming more prominent for senior management is protecting an employer’s intellectual property when using temporary staff.

A growing number of companies are taking steps to prevent theft of their intellectual property, for example by limiting access to it by temporary staff. This may well create another problem – given the increasing use of temporary staff in company IT departments.