Dubious Recruitment Practices Lead to Restraining Orders under Penalty of a Fine

In a short period of time, an employer lost nine employees, who all entered the service of the same new employer. In summary proceedings, the Sub-district Court prohibited two of the former employees from approaching employees for starting employment with the new employer. The new employer was prohibited from taking on employees of the old employer.
A company, belonging to an American group, was engaged in the purchase and sale of electronic components and products and in the storage of electronic applications.
The employment contract of an employee, who had been employed by this company since 2010 and who had worked there as its Vice President Sales, was terminated with a settlement agreement with effect from 1 March 2024.
The employee had also received a severance pay of €500,000.
As of 1 March 2024, the employee had started working for a newly established subsidiary of a German group. The employee was appointed there as a Director with the title of Executive Vice President. In April and May 2024, eight additional former-employees joined the subsidiary of the German group: one HR employee and seven employees with a sales position.
The employer had reason to believe that the former Vice President Sales had approached the other employees for entering the service of his new employer. There was also reason to believe that this former employee had approached customers for commercial purposes. The other former employees were suspected of having been involved as well.
All former employees had signed an employment contract with a confidentiality clause, a relationship clause and a non-recruitment clause (a clause which prohibits involvement in luring away employees). Therefore, the employer summoned all former employees to cease their unlawful conduct and to confirm, in writing, that they would comply with these summons. The new employer was summoned to stop facilitating, provoking and encouraging the former employees’ conduct and to stop benefitting from the old employer’s knowledge and relationships to its own advantage.
Failing to receive the requested written confirmations, the old employer requested the Sub-district Court in summary proceedings that both the former employees and the new employer, under penalty of a fine, should be prohibited from:
(1) approaching and recruiting employees of the old employer,
(2) approaching customers, relations and suppliers of the old employer,
(3) entering into commercial relationships with these customers, relations and suppliers and (4) sharing company information of the old employer.
In addition, the old employer wanted the former employees and the new employer to be ordered to provide copies of a number of written documents.
As for the former employees, an additional prohibition on acting in violation of the relationship clause, the confidentiality clause and the non-recruitment clause was requested.
The claims were based on the fact that the former employees had acted contrary to their contractual obligations and had unlawfully competed, and that the new employer had committed an unlawful act by facilitating and provoking this conduct and by taking advantage of it.
The Sub-district Court first of all decided that the former employer had an urgent interest in his claims because he suffered damage in the form of the loss of turnover. Therefore, the claims could be assessed in summary proceedings.
First of all, the Sub-district Court assessed whether the former employees could be accused of breach of contract or unlawful conduct. As for to the former Vice President Sales, the Sub-district Court established that it was stipulated in the settlement agreement that, among other things, the confidentiality clause, the relationship clause and the non-recruitment clause remained applicable. Breach of the confidentiality clause and the relationship clause, however, had not been demonstrated, according to the Sub-district Court. In particular, any evidence that customers had actively been approached was lacking. The Sub-district Court considered the employee unfairly disadvantaged, however, by not being allowed to maintain commercial relationships with customers after these customers had approached the former employees themselves. |

Furthermore, the Sub-district Court took into account that the new employer’s company was founded on 22 March 2024 and that a press release had highlighted the former Vice President Sales’ entry into the service as an important milestone in the worldwide expansion of the German parent company. In a short period of time, eight former employees of the old employer had subsequently been employed, so that the new employer's workforce almost completely consisted of former employees of the old employer. At several times, several former employees met for a meeting at the former Vice President Sales' home. All letters of resignation were dated 20 to 27 February 2024 and they all referred to the departure of the former Vice President Sales. Moreover, often the letters were word-for-word identical.
WhatsApp Messages showed that the HR employee had played a role here.
Based on these circumstances, the Sub-district Court concluded that the former Vice President Sales and the HR employee had collaborated to recruit former employees of the old employer. In doing so, they had acted in breach of the obligations under the employment contract with the old employer. For the other former employees, all that applied was, that they had dubiously been recruited. The new employer benefited from these breaches of contract since they generated turnover. The former Vice President Sales’ awareness that there was a breach of contract should be attributed to the new employer, since the former Vice President Sales was also the new employer’s director. Therefore, benefiting from any infringement of a contract was unlawful.
The Sub-district Court granted the requested prohibitions with regard to the former Vice President Sales, the HR employee and the new employer. The duration of the prohibition was limited to one year after the end of the employment contracts. With regard to the former Vice President Sales and the HR employee, the claim for the provision of copies of a number of documents was also granted. It concerned copies of the agreements with the new employer and communication and WhatsApp messages between the former Vice President Sales and the HR employee on the one hand and the former employees on the other.
The convictions incurred substantial penalty payments.

The Sub-district Court mainly based its judgment in the summary proceedings on the breach of the contractual obligations by two former employees. One might question whether the behaviour of the new employer and all former employees should not be seen as one wrongful act, committed in combination against the old employer, as well. After all, it seems as though there was sort of a conspiracy, led by the former Vice President Sales, against the old employer, which in fact resulted in the old employer's company being drained, as it were, in favour of the new employer.
Such a form of competition, directed against one particular other competitor might potentially qualify as unlawful competition, even without an applicable relationship clause or non-recruitment clause. In that case, some more evidence will probably be required first, but this evidence could perhaps be found in the documents that have to be submitted to the old employer now. If it were to be concluded that there was an unfair competition, this might lead to an obligation to pay substantial damages.