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Thread: Cooling off period - moving jobs from one company to a competitor.

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    Site Caretaker Dave A's Avatar
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    Cooling off period - moving jobs from one company to a competitor.

    Jacques Booysen's job hop from chief executive of the Gauteng Gambling Board to Tsogo Sun Gaming as a director has sparked something of a debate about revolving doors.

    Here are some snippets to give some background:
    Jacques Booysen, the former chief executive of the Gauteng Gambling Board, has joined Tsogo Sun Gaming as a director. This means he now directs new business developments at a company he used to regulate.

    Booysen's move reignites the debate about the need for a cooling-off period for senior state employees before they can join a company that they used to deal closely with in their official capacity.

    The issue of a cooling-off period has been of national concern. Last year cabinet appointed a task team, led by Geraldine Fraser-Moleketi, the minister of public service and administration, to come up with a policy on the matter. The team still has to report back.


    Tony Dixon, head of the Institute of Directors, said that the issue of revolving doors was one that still needed to be effectively addressed in South Africa. He noted that it was a concern in many sectors of commercial life and not limited to the movement of former government officials.

    "There is a requirement for auditors to have a cooling-off period before they take up employment with a former client," said Dixon, who added that this period did not necessarily deal with the situation adequately.

    Dixon, who was attending the 12th conference of the International Corporate Governance Network in Cape Town, told Business Report that the situation was particularly troubling when it involved an individual who might have had access to sensitive and competitive information. This could give the new employer a possibly unintended advantage. However, Dixon also said that it was unfair to prohibit people from taking up new employment opportunities.
    full story from Business Report here
    I tend to agree with Tony Dixon. There are general principles here that should be thrashed out. Perhaps some sort of common law principle in respect of restraint of trade. Or acceptable practices.

    Any thoughts on this, anyone?
    The trouble with opportunity is it normally comes dressed up as work.

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    Platinum Member Chatmaster's Avatar
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    Well in the case of Jacques Booysen, I feel that there should be at least a 1 year cooling period. He should have a non-disclosure agreement. The information he had access to was very sensitive. However, I also know from experience that a non-disclosure agreement has been worthless before when a jobhopper was taken to court. The judgment basically said that they cannot take away a persons right to work for a living.

    The question is should there be double standards for the regulators and state employees? I honestly cannot see the point. If I have to stay away from my future employer for a year, what prevents me from having contact with him, what prevents me from sharing some information with them in anycase, and how will anyone proof that this has happened?

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    Email problem RKS Computer Solutions's Avatar
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    Like to ask a question about this... Employment is one thing, but how would being contracted in as a consultant make a difference to the cool-down period?

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    Site Caretaker Dave A's Avatar
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    I think this goes to the core of individual and group rights. Restraint of trade agreements have been viewed as a conflict between individual rights (the right of the restrained person to a livelihood) vs the rights of the company that holds the restraint.

    However, it's not as simple as that. That company is an organisation representing the interests of a group of employees (among others). Empowering the restrained person to poach clients or otherwise abuse privileged information gained whilst working for the company affects the earnings of all those employees of the company. And shareholders. And the families. So really this is about the right of one individual against the rights of a group of individuals.

    There must be solutions to this seeming impasse.

    One possibility would be to require that the person does not practice in an area likely to affect the livelihood of the group he/she has left. This would not be denying the right to earn a livelihood, simply limiting the range of options in the interests of the remaining majority.

    This could be achieved either by location or field of endeavour.

    As always, the first suggestion might well not be the best.
    The trouble with opportunity is it normally comes dressed up as work.

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    Email problem RKS Computer Solutions's Avatar
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    I have a lady friend who is currently in the process of purchasing a beauty salon from a well-known lady who has been running the place for the last 10+ years... The purchase agreement has a clause which clearly states that she won't be allowed to advertise or startup a new business within 200km's from the salon anytime within the next 10 years, as well as no advertising using her name in any form within the same 200km range...

    In this case the location part is the winner purely because people do travel 200km's to visit the salon and in including the clause, it keeps the business coming to the salon and not following the name of the previous owner...

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    We have had adverse affects on our own business due to previous "inspectors" becoming our competition.

    Any person in authority in any govt. dept, either semi-govt. (S.A.B.S.) etc. should have at a minimum a one year cooling off period, either before being employed or starting their own business in competition to the very companies they previously regulated.
    It is an acknowledged fact that the authorities are being used for "training" as an eventual launch pad to their own business!

    Yvonne

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    Email problem stephanfx's Avatar
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    Cool down periods, IMO, depends on the importance of the employee to a company. A highly valued person might get some contractual restrictions put on their move to the competition, like a non-disclosure agreement, but not that the employee may not work, but that he may not use the previous companies strategies, work structures, etc. , nothing that would limit his ability to perform tasks in his new position.

    Sure there would be instances where it would be nearly impossible to ensure the safety of your company secrets, but that is a chance that is taken with every employee hired. It depends then also about how the employee left the company, if he/she left mad, try and get that agreement in place, so many times a disgruntled employee is the reason for many leaks.

    Anyway, cool down periods should be discussed and not forced, unless very sensitive business information stand the chance of leaking out.

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    Email problem RKS Computer Solutions's Avatar
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    Taking the weekend into account, anyone been following the F1 scandal? Ferrari Chief Mechanic sending info to Mclaren Chief Mechanic who were both in talks with Honda Chief Mechanic for work....

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    Email problem stephanfx's Avatar
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    wonder the cool off is going to be there?

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    Site Caretaker Dave A's Avatar
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    At the moment it doesn't seem to have helped Honda any.
    The trouble with opportunity is it normally comes dressed up as work.

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