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Employment, Tim Tyndall writes:

Employing former employees of a competitor without thought for the consequences. Finding the right people to work in a new business can be extremely difficult, particularly if it is in a highly specialised field. Should a previous employee of a competitor become available who has the relevant experience, it can seem a godsend. However, care should be taken to ensure that there can be no question of information being fed back to the competitor and that there is no danger of breaching contracts in place with that employee concerning poaching clients, otherwise the new business may find itself involved in expensive disputes. The solution is to obtain advice on the employee's previous contract and to ensure a comprehensive employment contract is drawn up at the outset for the new employee.

Failure to operate a confidentiality policy internally. This can be catastrophic for a new business, particularly if commercially sensitive information is passed on to a competitor. It is important that a confidentiality provision is included in the terms of service of all employees and that they are aware of its implications.

John Dix, partner in the Corporate Section of Hewitson Becke + Shaw said: "These are just a few of the areas that should be considered by new businesses and investors alike. But they are worth careful consideration because failing to do so can have a detrimental effect on shareholder value."

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