The non-compete ban is unlikely to be a concern for recruitment says Rupert Bell, Head of DACH
Rupert Bell, Head of DACH, recently spoke to Private Equity International (PEI) regarding his opinion on the recent FTC ban on non-competes in PEI's recent Side Letter.
Rupert believes that this won't be too much of a concern from a recruitment standpoint, as non-compete agreements aren't advantageous for hiring or retaining staff.
“It may be the old story of where the US sneezes, the rest of the world catches a cold, but if the European employers and the legislation doesn't change, it's likely just a local issue.”
What is the non-compete ban?
Recently, the US Federal Trade Commission implemented a new regulation prohibiting non-compete agreements throughout the country, across all sectors. The purpose of this rule change is to encourage competition. According to a statement by the FTC, these agreements have been keeping wages low, stifling innovation, and hindering the dynamism of the American economy.
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What does this mean for recruitment?
From a recruitment standpoint, the situation doesn't seem too dire. Rupert Bell, Head of DACH, explains that non-compete agreements aren't advantageous for hiring or retaining staff, so a potential future ban isn't a major concern. “The non-compete is the small print that you just wrap up as part of a compromise agreement… For the individual, protecting carry is the more important point to address.”
Moreover, the changes may not be as significant as they seem. Rupert describes them as more of a “cosmetic difference rather than a substantial one”, especially since they are currently limited to the US. He argues that “It may be the old story of where the US sneezes, the rest of the world catches a cold, but if the European employers and the legislation doesn't change, it's likely just a local issue.”
Although the full impact of the ban on private markets is uncertain, it's crucial to educate private equity professionals about potential changes going forward.
Moreover, the changes may not be as significant as they seem. Rupert describes them as more of a “cosmetic difference rather than a substantial one”, especially since they are currently limited to the US. He argues that “It may be the old story of where the US sneezes, the rest of the world catches a cold, but if the European employers and the legislation doesn't change, it's likely just a local issue.”
Although the full impact of the ban on private markets is uncertain, it's crucial to educate private equity professionals about potential changes going forward.
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