A recent court case against a breach of a restrictive covenant has highlighted the damage caused by former consultants leaving with more than a ‘Good Luck’ card in their possession.

At the end of June, RIG Veterinary Recruit successfully won a High Court order against ex-sales director Andrei Shelton, preventing him from engaging in any business involving veterinary recruitment/resourcing until June 2014.

The judgement follows 18 months of legal wrangling, whereby despite having signing a Restrictive Covenant agreement, Shelton left the employ of RIG and set up Salus Recruitment. It was later found that, before leaving RIG, he took with him a copy of RIG’s database of clients and documents detailing individual placements made by the claimant [RIG Recruitment] of vets and nurses, and what fees were charged.

Peter Flaherty, chairman of RIG, told Recruiter: “The eventual outcome of the case was that we were given all of the business that had been built by the new company and Shelton agreed to stay out of the specialist recruitment sector for five years. We also agreed a satisfactory outcome in relation to our costs, but it was such an unnecessary waste of everyone’s time.”

Flaherty acknowledges that consultants leave and can set up in business competing against you. “It happens all the time. I know of dozens who have spun away from various companies I’ve been with in the past. It’s not a problem - I’ve never been worried about competition.” Insurance policies are available to protect against employment disputes, including restrictive covenant breaches.

However, Flaherty doesn’t believe this would have been any use in this case. “You need to have the Injunction before the court as soon as possible. This would not happen if we were proceeding through a third party who did not have the same priorities. The insurer would be looking to minimise their cost.”

Jim Allison, managing director of Allison & Partners, which offers insurance services for the recruitment industry, refutes this assertion. His company offers an extension to the Employment Practices Liability cover: “In most cases, this is probably right. However, not in this case. Lawyers are appointed immediately so there are no delays. The wording is set up to make it very proactive.”

Speaking to Recruiter, Flaherty concluded that the real winners in this legal battle were the lawyers. However, despite the time and financial costs involved, he said: “I don’t regret doing it. You have to protect your business. If one person gets away with it, they’ll all think they can.”