Most UK employers experience staff turnover of 15% to 20% a year. Even in times of relative economic slumber, there is a reasonable amount of mobility in the job market. With economic expansion, comes even greater job mobility, with some sectors experiencing staff turnover of up to 50% a year. Although some staff will be retiring, leaving the country or moving on to try something new, most leavers will simply be moving on to what they see as a better opportunity in the same field. The problem of staff poaching, therefore begins to rear its ugly head.
Is There a Solution?
How can employers stop teams of employees, or critical individuals, being poached? Is there in fact any point in trying to prevent staff from leaving, even if they are in critical positions? While it is true to say that the law focuses on remedies and that these are usually only relevant once actual damage has been done to the business, employers are not in fact powerless.
One of the first things an employer can do comes well in advance of any specific employee problem. Once it is accepted that the problem should be treated like a regular business issue, a suitable business approach can be taken. The best place to start is with an appropriate risk assessment, focused on identifying two things. Firstly, to identify which staff or teams are the most likely to be tempted to remove information or attempt to take customers when they leave. In many cases, the greatest risks come from senior staff and from sales teams. Secondly, to try to identify the data and information that is most likely to be targeted. Then you can ensure that there is appropriate security, as well as a reliable system for tracking when and how the data has been accessed – which is an invaluable tool when trying to build up a picture of what people have been up to.
It is hoped that this work is backed up by ensuring that the right wording is in place in the employee’s contracts, particularly those who pose the greatest risk. It is a common misapprehension that restrictive covenant clauses do not work or are not worth having. Employers tend to think this is because lawyers argue so much over whether these clauses are enforceable, but this ignores the fact that this is exactly what lawyers are paid to do. When action needs to be taken, the stakes are usually high. So it is natural for each side to strongly argue its position. At the end of the day, however, these are nothing more than opinions which the lawyers are paid to have, although many strong cases have been abandoned despite positive legal advice.
Having identified the teams or work areas most vulnerable to poaching, or those most like to remove confidential information, and having backed this up with appropriate contractual restrictions, employers should be alert to any unusual activity. In many workplaces, it is common for rumours or gossip to telegraph the likelihood of an impending team move. Similarly, huddles of employees, furtive meetings outside the building, or numerous breaks to take mobile telephone calls can also typically signal that a team move is being planned.
Typical responses by employers range from bribery to threats. At one end of the spectrum, substantial incentives to stay are offered. At the other end, interrogation meetings and promises of vigorous legal action are the order of the day. Neither of these extremes is likely to be productive and many employers would be better served by attempting to focus on what it is that may make the employees concerned unhappy enough to consider leaving.
Of course, these moves are not always fuelled by unhappiness. Sometimes, the issues are purely financial. Therefore, once it is discovered that a current employee is intending to leave and has acted suspiciously in relation to business data, another set of decisions have to be taken. Do you dismiss? Or, do you suspend and investigate? By dismissing the employee, you may only succeed in giving them a good unfair dismissal claim and, at the same time, destroy the effectiveness of any restrictive covenants in their contracts. This also releases them early to join their new employer. If you suspend and investigate, this avoids those problems. But, the employee is still part of the business and may be able to do further damage by communicating with other staff or accessing work information.
An alternative approach is to place the employees on garden leave. This can be both a useful way of taking the heat out of a situation, as well as a way of signalling that the employer still retains control over the situation.
Although garden leave can be useful in the short term, it does not stop staff from using information they may have taken home undetected, or from making arrangements for programs to be duplicated and used abroad. Garden leave may keep people away from office-based information, but experience shows that anyone who is planning to leave will remove most of the information that they want, well in advance of their resignation. The key to an effective strategy is a swift and focussed investigation, which is increasingly technologically driven.
The important thing in these situations is to be well prepared and to respond quickly and efficiently once the news of the intended departure breaks. Most businesses, even in the IT sector, can be surprisingly unaware of what to do here. The most common issue is that there is not enough liaison between the team responding to the team defection and the technical side of the business to properly identify what is being looked for, which leads to a lack of understanding of the urgency involved and too much delay.
The European principle of the free movement of labour, together with the more traditional concept of free market competition which is enshrined in English law mean that no employer can ever expect to force an employee to remain in employment. The Courts always shy away from compelling a party to undertake specific performance of an employment contract. Even in garden leave cases, the Courts are never willing to compel employees to actually do any work, even if they will uphold the contract until notice expires. Any employer wishing to prevent team moves, or to reduce their impact, therefore needs to focus primarily on commercial and HR factors, rather than reverting to the law as a first option. Once it is demonstrated that the parting team have taken confidential information or have otherwise breached their obligations, then legal action becomes a far more viable and necessary option.