It’s been another interesting week for the Prime Minister, with ministers and aides resigning one after another to put her under pressure. Whilst these resignations are politically motivated, employers can often find themselves in a similar situation where employees resign en masse in order to leave together and compete with the employer.
As an employer, what can you do to protect yourself in these situations?
Firstly, if you believe a number of employees are resigning as a “team move” you should check the contracts of employment and whether there are restrictive covenants or other contractual clauses which prevent the proposed action by the employees. If there are, then it may be possible to take legal action to stop their plans. Such action needs to be taken quickly and would need specialist legal guidance to ensure the best result. Clauses to look out for include any restriction on competing with the business, clauses covering confidentiality and intellectual property, data protection clauses, and clauses obliging Directors to act in a certain manner while employed, such as a duty to inform the company of wrongdoing or conflicts of interest.
If your employees have garden leave clauses, you can quickly remove them from their duties and keep them out of the business while they work out their notice period. This can help protect your confidential information and you can work on redistributing the clients and customers amongst remaining staff.
Where there are no contractual clauses which help, you may be able to rely on implied duties to help, such as the implied duty not to compete with the employer and implied duties of fidelity and good faith. Whether these apply can depend on the level of seniority of the employee so, again, it is necessary to take advice on the matter to understand what breaches the employees may have committed.
Possible action against the employees can include injunctions to prevent them taking advantage of any unlawful conduct by them, orders for return of documents, and financial remedies. However, this will only be possible where you correctly follow protocol and can institute High Court proceedings quickly. This can be an expensive course of action and needs specialist legal assistance from the outset.
If you are concerned about resignations within your business, our employment team would be happy to discuss this with you. Please contact us on 0161 926 9969 or by email at firstname.lastname@example.org.