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Employers advised to check senior employee contracts- 27/10/2011
Pressure of having to work harder without a pay rise is making senior employees consider moving jobs once again, increasing the risk to employers that they will not only lose a valued employee, but also vital contacts and business information to a rival, warns a leading Wolverhampton employment lawyer.
Tracy Worthington, Partner and Head of FBC Manby Bowdler’s Employment Department, says that employers should protect themselves by reviewing their employment contracts to check on the restrictions in place when an employee leaves.
“Many senior employees have worked for the same pay and conditions for the past three to four years and, although nervous of a move, many are now considering a new position, especially if they feel that their current employer does not value them. We are advising increasing number of employers suddenly faced with an unexpected departure,” says Mrs Worthington, who is based in FBC Manby Bowdler’s Wolverhampton office.
Mrs Worthington’s experience is supported by a recent Chartered Institute of Personnel and Development (CIPD) study of 2,000 workers which found that two out of five workers complaining of excessive pressure are now looking for a new job.
Mrs Worthington continues: “Employers need to consider what post-termination restrictions are in place for their employees, usually known as restrictive covenants, how valid they are and what they will cost to enforce. They should also consider how they can minimise the fallout once an employee has given notice and consider whether and how they can use ‘garden leave’.”
According to Mrs Worthington, restrictive covenants in a contract should aim to protect a business from a former employee divulging confidential information; soliciting customers; working for a competitor or soliciting staff.
She explains: “The time and geographical limits of the restrictions need to pass the ‘reasonableness’ test, and will vary from one business to another, dependent on where and how it operates. But, this is where many employers fall down, by trying to insist on restrictions that are too long and far reaching.
“Employers need to look again at the restrictive covenants which they have in place for senior staff, and ensure that they are reasonable. Those that were drafted a number of years ago are much less likely to fall into that category, so they may need revising. However, this should be a vital part of an organisation’s risk management planning in the event of losing a senior manager.
“Vacancies always exist for motivated and skilled staff and employers risk losing their most valued employees - those most able to compete in a tough labour market, so it would pay them to put steps in place firstly to retain them, but then to ensure they are protected should they leave.”