The long goodbye, or an early exit – weighing up the options
Dealing with a departure from your team can pose operational and business risks, which need to be carefully managed. A business enjoys much stronger protection and greater flexibility when dealing with team member departures if it has a well-drafted employment contract in place.
Timeframe and requirements
You will first need to consider what is required from the employee in the final run out, and the timeframe. Normally an employee will have served their contractual notice to leave, and the employer decides the best course of action. An employee could be placed on garden leave, during which they must uphold the highest level of express and implied duties (e.g. the duty of fidelity etc). Remember that the business can also require the employee to use any final holiday during this period to prevent them from receiving a further windfall with additional payment for accrued unused holiday at termination.
Handover process
Once they have completed a thorough handover, access to confidential information should be restricted, and they should direct any new enquiries from key clients/contacts to another team member. Cementing key client and key contact relationships should be the focus during this period. If an employee is placed on garden leave, this period counts towards their post-termination restrictive covenants, and you should factor this into your strategy.
Payment in Lieu of Notice
Alternatively, the business may opt to terminate early and pay the employee in-lieu of their notice period. It is important to note that, strictly, the employment contract should include a provision that allows the Company to make a payment in-lieu of notice (usually at the rate of basic salary only) under the contract terms, otherwise the employer could open up the avenue for an employee to assert that the employer has acted in breach of contract – in turn releasing the employee from their own ongoing obligations (e.g. post-termination restrictive covenants).
A more onerous payment in-lieu of notice clause could spread the PILON payments over monthly instalments and require the employee to account for any alternative income received during the PILON period. Note that bringing forward the termination date and paying the employee in-lieu will also convert the resignation into a dismissal, so keep an eye on any potential challenges.
Immediate departure or leaving for a competitor
Sometimes an employee may attempt to leave immediately with no valid basis, and maybe to join a competitor – you can review whether seeking injunctive relief from the Court (an order that the employee immediately ceases their activities in breach) is necessary. A business must respond very quickly indeed to any such breach by an employee otherwise the opportunity to obtain an injunction may be lost, and the employer could be limited to a claim for the damages (foreseeable losses suffered) due to the breach only.
The company should remind the employee of their contractual obligations (e.g. to maintain confidentiality, without limit in time for as long as the information remains confidential, and the post-termination restrictive covenants that the employee has agreed – e.g. not to solicit or deal with key restricted clients). Remember that in order to be enforceable, a post-termination restriction must protect a legitimate business interest and must be reasonable in scope. This helps prevent employees from gaining an unfair advantage when joining a competitor. The announcements/messaging to the market and key clients should be set, and the employee should return/delete all confidential information held off site.
Speak to our team
Please do not hesitate to get in touch with a member of the team if you need any assistance protecting your organisation when an employee leaves, or if you require guidance drafting comprehensive employment contract terms.
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