DeeDee Doke
27 February 2015

SWOT up on the legals

In the euphoria following your decision to start up your own recruitment business, reality sets in. If you’re like many who opt to take the plunge into self-employment, taking on the responsibilities of a sole trader or a limited company, the next thought is “What do I do now?

Chances are, you are still on the payroll of another recruitment company. If so, tread lightly — make your exit with class, style and admirable professionalism. Even more importantly, especially if you plan to compete within the same sector or locale, do it legally and start your business on the firm footing of best practice.

That means fulfilling both the letter and spirit of the contractual terms of your employment agreement with your employer. It also means that you should avoid the temptation to steal away with confidential data that belongs to your employer.

In addition, your quest to fulfil best practice should apply to developing clear, enforceable contracts for your business from the start, protecting your own clients and candidates, and outlining specifics of agreements between yourself, business partners and suppliers.

I see the business relationships at their best and their worst — when they start up and when they bust up,” Robert Wynn Jones, partner at law firm Mishcon de Reya, tells Recruiter. Wynn Jones is an expert in data theft and civil fraud with expertise in the recruitment sector.

He emphasises that getting back office structures and contractual relationships with your future employees and business partners clearly set out is “absolutely essential”. He continues: “It doesn’t matter whether the business partners and employees are your parents, siblings, lovers or friends — without formalised and clear contractual arrangements, the business and personal relationships and the business itself are often destined for disaster. If the rules of the game are clear and enforceable, the chances of damaging, expensive and protracted disputes are significantly reduced.”

Top legal tips for new recruitment entrepreneurs

  • Assume you will have a falling-out with an employee or business partner. This may be pessimistic, but it means that if the rules are set out clearly in the contracts between you, the dispute is likely to be far less difficult, time consuming and expensive.
  • Your most valuable assets are your clients and candidates. These must be protected.
  • The best way to do this is to have clear and enforceable restrictive covenants in employment contracts and provisions regarding the non-misuse of confidential information such as candidate databases.
  • Do not use any confidential information such as candidate databases owned by a previous employer or business.
  • If a new joiner or business partner brings a candidate database or other potential information to your business, you should closely check the provenance of the confidential information, ensure that the new joiner confirms in writing that the information is owned by him or her and is able to be utilised in your business.
  • If you discover the information is not the property of the new joiner, do not use the material and consider whether you should continue with the appointment of the new joiner.
  • Protect your new business from attack on your critical business data. Information security policies and guidelines must be clear, up-to-date and communicated clearly to all data users within the business. These should give clear guidance on when, where, how and what data may be moved.
  • Seek legal advice on contracts and data protection.

To view the full article, please click here.

For more information on Recruiter magazine please click here.