Terrie's Job Tips -- Going into Competition

Today's topic deals with the thorny issue of going into competition with one's employer and what is, and is not allowed. Reminding readers that I am not trying to give legal advice here, if you pick up on some points here and want to know more, the best thing to do is to contact your legal advisor for the full story.

Luckily for employers, the idea of a Japanese employee leaving the company and going into competition is not very common. Most likely because for most industries, starting up and running a new business is fraught with risk, and even with excellent service, response, and pricing, the reality is that the company with a longer track record and having a high-quality customer relationship is probably more effective as a competitive element. Never underestimate the power of Old Boy relationships, and always work to create some for yourself.

But there are some industries where going into competition with the boss is not so uncommon, and recruiting, English schools, retailing, research, advertising, and some other industries quickly come to mind. Typically if the barrier to entry is low, if good execution brings rich rewards, and if the ex-employee has built up a solid personal network of customers and vendors, then you can't blame him or her from wanting to see if they can do better - especially if the boss is a bit incompetent or greedy.

In leaving a company to go into competition though, the former employee has to be very careful about what they do and don't do. If common sense and fair play are not brought into focus, breaking these basic rules will land you in court and add the burden of a large lawyer's bill as well as possible damages for ill-effects caused to the former employer.

1. Sanctity of Data.
You cannot under any circumstances use, copy, email yourself, or otherwise remove company data from your employer's premises with the intent of reusing that information for your own business. Doing so, if you get caught doing it, opens you up to charges of the theft of company property, and also possible infringement of the Personal Information Law - which the Japanese courts are very sensitive about right now. If you must take data with you, the best and most reasonable thing is to ask your soon-to-be-ex-employer if you can either take your customer meishi, collected over the course of your employment, or at least take a photocopy of your meishi collection. Not many employers will deny a departing employee this.

2. Unfair Use of Knowledge.
If you have held a senior position, especially if you have been director or above, you may not be able to hold a similar position or be the owner of the new business, on the basis that you could be using know-how and company information unfairly gained by virtue of your senior position. If you must go work for a competitor, be sure to be a regular salaried employee, and not an owner or senior manager. People often tell me that they have signed a non-compete agreement and whether this is valid and can be enforced. It's not a black and white thing, but the higher your new position is in the competing company, the more likely it is that you will be challenged. Generally, if you're joining a competitor as a salaried worker, then the constitution and various labor laws guarantee you the right to work and ex-employers can't exercise the Non-compete agreement even if you signed it. Perhaps more important and less easy to circumnavigate than a non-compete, is a non-disclosure agreement. If you have signed one, generally it is enforceable.

3. Vindictive Hiring.
You cannot go back in to your previous company and start recruiting out employees. Doing so would clearly establish that you're using information gained from your previous employment, for unfair advantage. Even if you use a recruiter in between, if it was proved that you were the retaining party for that recruiter, then unfair use of privileged information would still apply. What is probably the most legal way to deal with former colleagues is if they hear that you are doing well in your new venture and they then approach you. Again, the right to employment and to move to new jobs in a given sector is protected by law.

My advice to people considering going into competition with a former employer is to not hold grudges (so as to let reason prevail over your will to win at all costs) and to be creative in positioning the new business in a different market to the previous employer. This may require some ingenuity, but as an example, if you'd been working for a recruiting company as a consultant, going off and setting up a job board like www.daijob.com would probably pass the sniff test and you'd be allowed to do it.