What is the ruling on attracting an outstanding employee from a competing consulting firm to work for me with a salary increase, knowing that this will negatively impact the other firm? And does the ruling differ if the employee works for a government entity?

A Muslim is not permitted to take a job replacing another employee whose contract has not expired, unless it is with the latter's consent. This is because it falls under the category of a Muslim making an offer over the offer of his brother, which is forbidden. This principle also applies to leasing. However, if the employee leaves the office because their contract has ended, or with the employer's consent, then one may work for that employer or for someone else, and there is no sin in that.