It is an inevitability of business that staff will come and go but the New Year can prove to be a time of feast or famine for employers, on the recruitment front.
Employers hoping to recruit experienced, skilled workers may benefit from the “new year, new me” mentality of individuals looking for a new challenge but should be alert to its own employees developing the same mentality and looking to leave.
With Lent almost upon us, it seems an appropriate time to consider how employers can best survive the proverbial “famine” of staff leaving. The demise of the BBC’s Great British Bake Off (of which I am a particular fan) lends itself to this analogy and highlights the issues many employers come across in recruitment: Mel and Sue’ will not be following the cult programme to competitor Channel 4 and have shown their loyalty to the BBC along with stalwart Mary Berry, but Paul Hollywood has confirmed he will follow the programme to its new home.
Although the female presenters of GBBO have enjoyed great success during the programme’s seven series, they obviously see other opportunities at the BBC. Incentivising staff to stay is one way to protect your business but employers are increasingly concerned about minimising the adverse impact of unforeseen departures.
A key tool to consider on this front is post-termination restrictions. If tailored to an employer’s needs and the particular employee’s role, they can be an effective way of protecting a business when employees leave. Some key issues to have in mind when considering the terms of such restrictions are:
Properly identifying the “legitimate interests” of the business you are aiming to protect. The legal enforceability of these types of clauses are dependent on the information or interests being protected being capable of such protection, and the steps taken to protect them being no more than reasonably necessary. Clauses that fall outside of this remit will be unlawful restraints of trade.
Three key elements to consider in this regard are:
Duration this will vary across different sectors and the nature of the employee’s work. Sectors with a transient client base may need to consider a shorter restrictive period of, say, 3 months post-termination compared with businesses with a consistent client base.
Scope employees should not be unduly restricted from carrying out activities or engaging with contacts etc. that they were not involved in or aware of during their employment. Arguably this goes beyond what is necessary to protect the business interests if the employee had no influence during employment.
Area whether a business has a local, regional, national or international presence will be relevant to the geographical area an employee is prevented from working in. Non-compete clauses should ideally be limited to the sphere of the employer’s influence and take into account the employee’s location and/or area of responsibility.
Ensure the restrictions are appropriate at the time the contract incorporating them is entered into. Recent case law suggests it is possible for employers to make provision for expected future progression of employees where both parties understand an initial trial or training period are temporary, but onerous restrictions for junior employees are unlikely to be enforceable.
To counter this, as employees rise through the ranks, review their restrictions. If they are promoted or gain access to more sensitive information, updated restrictions should be introduced together with consideration for acceptance. Continuation of employment will not usually be sufficient to act as consideration for the introduction of new or more onerous terms; generally a financial payment is offered along with the new terms of employment to secure the enforceability of these tighter controls.