Denmark labor issue to air at IBM annual meeting

An employee of IBM Denmark has travelled to Knoxville, Tennessee, to alert executives and shareholders attending the company’s annual meeting Tuesday of a labor issue that he feels is at odds with the corporation’s values and could expose it to legal liability.

Claus Juul, a security consultant at IBM, told IDG News Service that he intends to question the non-solicitation, no-hire terms of IBM’s contracts with its customers in Denmark and elsewhere on the grounds that employees have not been informed of these conditions, which may limit their ability to change jobs. Non-solicitation clauses prevent customers from offering positions to IBM employees, and no-hire clauses prevent them from giving a job to an IBM employee who pursues an opportunity with them.

The Danish IT workers union PROSA is suing IBM on Juul’s behalf, contending that the deals violate existing laws. Meanwhile, the country’s minister of labor has put forward a proposal to make such deals illegal if employees are not notified of them, Computerworld Denmark has reported. Danish law requires that employees be notified of all conditions related to their employment, and they are often compensated for terms such as non-compete clauses that limit their mobility, according to some observers.

Besides warning shareholders that IBM may face exposure to liability if the deals are found to be illegal in some jurisdictions, Juul said he will ask how the secret nature of these contracts is compatible with the company’s high ethical standards and its corporate value of “trust and personal responsibility in all relationships.”

However, contracts between IT service providers and their customers often include non-solicitation clauses, said a U.S. lawyer who has no direct knowledge of the IBM case but has represented clients in over US$4 billion worth of outsourcing contracts.

“Non-solicitation clauses are extremely common,” said Brad Peterson, a partner in Mayer Brown Rowe and Maw in Chicago. No-hire clauses are less common, he said, but also not unusual.

Former Danish Prime Minister and current Member of European Parliament Poul Nyrup Rasmussen has told Computerworld Denmark that he believes the deals are illegal under European Union laws governing mobility of labor. Rasmussen is preparing to investigate such contracts further at the E.U. level.

(Kristian Hansen of Computerworld Denmark contributed to this story.)