Protect your business from departing employees

TalkHR Comment: Are you prepared for employees to leave your organisation and take with them more than just their P45. If you need help or assistance to ensure you have robust policies in place to prevent Confidential Information being used by former employees in future employment, please call a member of our team today on 01495 687070.

 

When senior employees leave, employers often lose valuable experience and knowledge, and relationships with clients can be destabilised. However, when key employees join a competitor, the risks can be even greater.

Business contacts

 Confidential 1

 

Increasingly employees are using resources such as LinkedIn to help position themselves to compete with their employer in the future. The ability to connect directly with clients, colleagues and suppliers through social media means employees can easily transport those relationships to their new employer. There is a notable increase in employers reporting senior-level employee departures associated with breaches of restrictive covenants and theft of confidential information.

Employers are often unprepared for this kind of unfair competition. A global survey by computer security corporation Symantec earlier this year showed that half of all employees who left their jobs in the preceding 12 months retained their employer's confidential information and 40 per cent said they planned to use it in their new job.

 

Strategic decisions

 

Those employers aware of the risk of a more buoyant job market are taking active steps to help retain key employees, particularly those at senior executive level.  For example, there is an increase in the implementation of long-term incentive arrangements which provide for staggered payments to be made to employees over a number of years. This can be a strong deterrent to resigning, as usually employees will forfeit their incentive if this happens. Employers can also ensure employee notice periods reflect the period of time it will take to find a suitable replacement, and can make pay reviews and promotions subject to employees agreeing to longer notice periods.

 

 Confidential 2

Checklist

 

 

There also are a number of ways in which employers can protect their businesses against unfair competition from departing employees. Employers can:

 

 

  • put in place a comprehensive confidentiality agreement. This is key. It should clearly identify what constitutes confidential information and what employees must and must not do. Employers are entitled to implement critical policies such as these, but are advised to consult with employees about their obligations before doing so.

 

  • require employees to enter into post termination of employment restrictive covenants to prevent them from unfairly competing with the business.  For example, these clauses could prevent client-facing sales or commercial staff from soliciting or dealing with customers for six months after the termination of their employment. Employers will need employee consent to this, so it is best to deal with this as part of a pay review and/or promotion for existing employees. If employees breach their restrictive covenants, employers may be able to take High Court action to stop any further breaches and claim damages for losses incurred.

 

  • implement a comprehensive social media policy regulating use of sites such as LinkedIn and Twitter; for example, Employers could require employees to replicate LinkedIn contacts on the employer's database or to delete them from their account on termination. Again, employers are entitled to implement policies such as these, but are advised to consult with employees first.

 

  • use IT software to help protect against unlawful downloading of confidential information;  for example, software is available to disable hardware in order to prevent the downloading of information to USB or similar devices. 

 

  • ask departing employees about their future employment plans and note their response. Employees are not legally obliged to offer this information voluntarily. However, employees can breach the implied duty of trust and confidence if they lie about their future plans when questioned. Employers do not need to caution employees about giving a truthful response, but doing so may encourage the employee to be more honest about their plans.

 

  • ensure employment contracts give the company the right to require employees to stay at home during their notice period (known as garden leave). This can help to keep the employee away from both a competitor's business and their previous employer's. If employment contracts do not provide for this, employers can consider amending contracts at pay review/promotion time.

 

(Source : CiPD, 2014).

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