New rules on City headhunting

A LANDMARK decision in the High Court today could set out terms on which top City traders can be head-hunted by rival firms.

Mrs Justice Cox was due to rule on a case in which a City derivatives dealing firm alleges trader Simon Morgan breached the terms of his employment contract after he was poached by an arch-rival.

Morgan, 31, had been hired from the dealing room of TFS Derivatives, a subsidiary of Tradition Financial Services, by competitor GFI. Counsel for TFS alleges that Morgan, who worked in the over-the-counter market for derivatives based on Germany's DAX index, breached his contract when he went to rival equity derivatives firm GFI to perform a similar role.

Much of the evidence and legal argument has focused on the issue of gardening leave - a City tradition that normally involves a period of paid leave for a departing employee headed to another firm. It is designed to help protect client connections and other confidential information. The court may decide whether a typical hiatus of three months between jobs is appropriate.

Morgan has told the court that he was headhunted by Ron Levi of GFI, which is financing the costs of the case. Morgan said he was paid £75,000 a year plus a bonus, but had been tempted to move to GFI for £80,000 plus bonuses.

The court heard TFS wanted to keep Morgan out of the market so that TFS 'can then be reasonably protected' for a short period.