Whilst businesses across the country continue to deal with the effects of the global pandemic, some are also facing the prospect of losing entire teams to competitors. Groups of employees working together are facing a variety of push and pull factors: on the one hand, a business may want to cut costs by restructuring. In doing so, the business may be considering redundancies or have to scrutinise the performance of employees and potentially dismiss an employee or a group of employees. On the other hand, the decision to leave may have been initiated by the employees themselves, who may have spotted an opportunity at a competitor or have a desire to start their own venture. Some senior executives may want to move collectively with their team and they may be prepared to do this unlawfully. If a business does not have the systems in place to detect a team move or respond swiftly to such a threat, the business could see a senior executive walk out of the door with an entire team and a valuable book of clients. The effects of a team move can be devastating for a business, both in terms of immediate loss of revenue and business stability but also as a boost to a potential competitor.
The prudent approach is to plan for the “worst-case scenario” in advance. It may help to think about team moves from two different angles:
- What systems can be put in place to detect a team move in advance?
- What can be done by the business in response to a team move once unlawful activity is suspected?
Contract Check
A good starting point is to make sure that the employees’ contracts are up to date. For example, is there a power in the contract to place the employee on garden leave, once notice is given? How long is the notice period? A short notice period of just a few months for very senior employees might not be appropriate. The business should consider inserting terms in the employment contracts of its employees that prevent certain activity post-termination of employment. For example, there might be a clause that prevents an employee from working for a competitor for a certain period of time following the termination of their employment or from soliciting customers/clients or from poaching employees of the business after they leave.
Systems
On the practical side, employers should consider the employees’ digital footprint and whether technology can be utilised to detect unusual patterns of behaviour that might point towards a team move. For example, it is possible for an I.T. system to notify an employer when there is a sudden change in the volume of printing or where access to the office has taken place at unusual times, perhaps in the evenings or on weekends when an employee would not ordinarily be at work. If employers choose to undertake workplace monitoring, it is also important for employers to keep an eye on data protection and privacy rights, particularly in the context of the UK GDPR.
Sometimes it is not technology which will tip-off an employer to a team move but simply a change in human behaviour. For example, has the employee randomly asked for a copy of their employment contract or post-termination restrictions?
Responding to a team move
A good first step is to preserve evidence by securing all the data on the IT system. If unlawful activity is suspected, it is important to preserve valuable evidence such as email correspondence or telephone records. The business may want to consider suspending an employee whilst investigations take place. If the employee has resigned, a business may want to place the employee on garden leave where the power is available. This will have the benefit of removing the employee from the business and keeping the employee away from confidential information, clients and employees.
Employers should also consider having an exit interview with departing employees and responses should be tested for consistency. Employees may be incentivised to stay and may spill the beans on any unlawful activity.
It is important to balance the need to respond quickly and robustly to the threat of potential competitive activity against the impact on the rights of the individuals. The business should be careful to avoid falling into the trap of breaching the implied term of mutual trust and confidence giving the employee the opportunity to argue that they have been constructively dismissed and that they are no longer bound by the post-termination restrictions in their contract of employment.
Please listen to our podcast for a discussion between Ivor Adair and Shiv Raja about the issues explored in this article and more.
