Protecting your business where employees are in short supply

The Office of National Statistics has been reporting the number of job vacancies in the UK economy for 20 years and, this month, for the first time ever, that figure has broken the 1 million mark. Economists tell us that there are a variety of reasons for this and, unsurprisingly, top of the list are the end to lockdown; Covid travel restrictions; and, of course, Brexit.

Whatever the cause for the uptick in available jobs, the development means that, now more than ever, employers will be desperate to retain their best employees and businesses will therefore have a fight on their hands to attract talent. Of course, the best way of retaining good employees is to use the “carrot” approach: if people are treated well and are happy, they will be more likely to stay.

Nevertheless, the reality is that, however well they are treated, employees are entitled to and will leave from time to time. Whilst you can’t stop them doing so, you can take steps to limit the damage they might do to your business if they do leave, which, by extension could be a factor which may encourage an employee to stay for a time. To achieve that, employers would be wise to consider the following when aiming to maintain and strengthen their workforces:

Do you manage the access employees have to business-critical information and are you able to monitor activity where necessary?

For example, many employers will have in place detailed policies which govern the use and monitoring of communications, and devices to ensure that employees are not able to see confidential information unless they really need to for the purposes of doing their jobs. If you haven’t put in place these sorts of measures, employees may be able, all too easily, to leave with confidential information and misuse it without you knowing about it, even if you have included detailed confidentiality provisions in employment contracts.

What about notice periods?

Even if an employee decides to leave, unless you agree otherwise, they will still need to serve a period of notice. This might provide valuable time during which to find a replacement and to protect client relationships, but that will only work if you have long enough. For that reason (and whilst there will be a price tag attached in terms of salary payments) it is always worth considering when preparing an employment contract whether there might be value in going beyond the bare minimum notice requirements.

Do your employment contracts provide the right level of protection in the event an employee is considering leaving?

In particular, you will want to consider whether it would be appropriate to limit an employee’s ability to join a competitor, to solicit clients and to poach colleagues in the future. With the UK government having engaged in a recent consultation about changing the law which underpins the use of post-termination restrictions (such as non-competes and employee non-poaching provisions) and President Biden having issued an Executive Order which encourages US States to compel employers to minimise the use of non-competes, the mood music around their inclusion in employment contracts has been fairly negative of late. Nevertheless, as it stands, they remain a legal tool in the UK which, if used fairly and appropriately, can be an effective way for employers to protect their businesses and to stabilise their workforces.

What would you be prepared to do if an employee or a team of employees decided to leave and were to disregard their legal obligations (such as a non-compete clause)?

If well-drafted and appropriate, it is often possible to secure an injunction from a court which will compel an employee to abide by their ongoing obligations. However, doing so can be an expensive process and it is not without risk. Some employers will take the view that enforcement is “not worth it”. While it’s always important to consider the pros and cons of each case, the more often an employer lets an employee “get away” with breaching their obligations, the more likely they will be to embolden others who are minded to do the same. For that reason, some employers will decide that there can be great value in sending a message to employees that they will be expected to abide by their contractual obligations.

It is important to bear in mind that the above examples will cut both ways and that, if you are seeking to recruit new people, you should be mindful of the obligations they will have to their current employer. If the target employee has a short notice period and no restrictive covenants, recruiting may be mercifully simple, at least from a legal standpoint.

However, if they are subject to a long notice period, detailed restrictions and the employer does not want to let them go, you may be sucked into an expensive fight for which you, as the would-be employer, could be liable if you have actively encouraged someone to disregard their current contractual obligations, or even if you have just turned “a blind eye” to their existence. When recruiting, it is wise to ask an employee about the details of their contract so that you can form a considered view about the risks associated with recruiting them.