The World Cup never ceases to create drama, although unusually this time, the drama kicked off before kick off.
Just two days before the start of the tournament one of the favourites to win the World Cup, Spain, sacked their manager Julen Lopetegui. The reason for his dismissal was that Real Madrid had, with spectacularly poor timing, announced him as their new manager just before the start of the World Cup.
Whilst the facts on this are slightly unusual there are some important lessons employers can take when a senior employee hands in their notice. As a quick spoiler, sacking them is not normally the best idea!
What you need to consider when an employee announces their leaving
It seems that the head of the Spanish Football Federation was more annoyed by the fact he was only given 5 minutes warning of his manager leaving than the actual fact he was departing. Whilst you may have an emotional response when an employee hands in their notice, from a business point of view there are other reasons why you may need to be concerned.
When an employee announces they are leaving, especially to a competitor, the biggest concern is about the potential damage to your business. This employee will still have access to any clients, staff and confidential information about the business. Even with protections in place within the contract and implied contractual terms an employee could put in place plans to take information, clients or staff with them to a competitor.
Even if you limit an employee’s access to this information, you are still likely to see the inevitable dip in productivity when an employee is aware they are leaving.
What can an employer do to protect themselves?
The best way of an employer protecting themselves and the most common is to put an employee on gardening leave. This is when the employee remains employed by you but you do not require them to come into the office and instead they stay at home and you can require them to do work where they are not likely to cause any future harm to the business.
To put an employee on gardening leave, you should have the express right to do so in your contract. If you don’t have this right in the employee’s contract and you do this, they can argue that the employer has breached the contract and bring the contract to an end immediately and also release themselves from any post-termination restrictions.
When an employee is on gardening leave they are still bound by their contract, so they should be paid as normal and will have to remain bound by any express or implied terms in their contract of employment. As they will be paid as normal and in all likelihood will be doing very little work, this option should therefore only be used for those employees whose departure from the business may cause problems.
A key issue you often see with gardening leave is what to do if the employee has a company mobile phone and laptop. These devices are likely to have access to sensitive data about the company, even if that just is client contact details. It is likely that under the contract they are entitled to a work phone and laptop and you may want them to have some access whilst at home for any work you require of them or getting in contact. In this situation we would recommend taking their phone and laptop and replacing them with an alternative which has reduced permissions and no work contacts on.
Another issue which commonly arises is that if an employee is on gardening leave and they have any post-termination restrictions, those restrictions should be reduced by the amount of time someone is on gardening leave. As an example if an employee has a non-solicitation of clients post-termination restriction which lasts for 12 months but is on gardening leave for 6 months, then the post-termination will only last for another 6 months following the end of their gardening leave.
If an employee is not going to a competitor and there is little need for a handover then agreeing to release the employee early from their notice period can be beneficial as it means you do not need to pay them for their entire notice period. This should not be done unilaterally; you can only agree to release an employee from a notice period if they agree to be released early.
Can you do what Spain did and just terminate the contract? If they have less than two years service then as long as there are no discrimination or whistleblowing issues you can, but you will still need to pay the employee their notice so releasing them early from their contract should be the preferred option.
If they have over two years’ service you would put yourself at risk of an unfair dismissal claim. In all likelihood the losses would be limited to the expiry of their notice period but they would be entitled to other compensation payments as well. Therefore we would never recommend this option due to the risks involved and instead gardening leave would be the preferred option in these circumstances.
Avoid a kick off – the best exit strategies for employees
When an employee announces they are leaving, any decision taken should be a rational commercial one that is in the best interests of the business.
It is rarely the best option to put junior members of staff on gardening leave, instead consider amended duties and limiting their access to information.
For senior staff or those with lots of client contacts, such as in sales, gardening leave is usually a safe bet as long as you have the right to do so within your contract.
You should also consider releasing the employee early from their notice; this will save your business money but also build up goodwill with a leaving employee which may pay dividends in the future.