The prospect of a team move is often high on the list of prospective 'worst case scenarios' for many employers. However, with careful planning and management, employers can protect themselves, their brand and the morale of their staff from the worst potential impacts.
Well-drafted employment contracts will go some way in protecting employers, including provisions such as post-termination restrictions, garden leave, as well as express duties of loyalty, fidelity and disclosure of competitive activity.
We list a series of other practical considerations below.
Reviewing emails and work devices
An important initial step is to gather as much information as possible on how the team move has been organised and determine whether there is any evidence of breaches of duties, or of confidence. Employers should review and investigate the email accounts and printing activity of employees that indicate they are leaving to join the competitor. If employees have been given work mobile phones, employers should also request that employees return these (without deleting any items) so they can be examined.
'Red flags' could include:
- items such as Outlook meetings with suspicious subject descriptions (or none at all), especially with recruiters and/or colleagues who have also resigned;
- phone calls or texts between colleagues who have resigned;
- unusual levels of printing activity; and
- emails from work accounts to the employees' personal email accounts.
Exit interviews
Employers should look to conduct exit interviews with employees who have indicated that they wish to resign to join a competitor – ideally after reviewing the email accounts and devices of the employees. Employers will then be able to ask specific questions about any possible matters of wrongdoing or collusion, while being very careful not to accuse employees of misconduct without appropriate evidence. If post-termination restrictions are in place, an employer can also remind them of these and ask for undertakings that they will not breach them.
Persuading staff to stay
Exit interviews will also give employers the opportunity to inquire as to the reasons for an employee's resignation and probe whether there is anything that they can still do to prevent this. Persuading even one employee, who was originally part of the team move, to stay, can serve as a valuable resource for the employer to gather information on how the recruitment exercise was carried out and whether there have been breaches by other departing employees or by the competitor who is their new employer.
Garden leave
Garden leave can be an effective tool in this context. Employers should consider putting employees who have resigned on garden leave (ideally by relying on an express contractual garden leave clause) which enables the employer to require that they stay home and don't communicate with colleagues or clients. It is worth noting that employers cannot restrict those on garden leave from meeting people for purely social purposes. Putting departing employees on garden leave also gives the employer further opportunities while they remain in employment to uncover additional evidence of breaches of duties and require them to attend further investigation meetings.
Securing clients and existing employees
Employers should look to stabilise their business by promptly speaking to key clients serviced by the resigning employees. This will help to secure relationships and reassure clients of continuity of service.
Similarly, employers should meet with existing employees, including those at risk of making similar moves, to reassure them about the business' stability and to build loyalty. Additional measures could include awarding salary increases, retention bonuses and promotions. Should an employer choose to bring a claim against the competitor who has benefitted from the team move, these additional costs could qualify as heads of loss.
A team move can never be completely guarded against and although these recommendations will go some way in mitigating damage, every employer will need tailored advice, taking into account their strategic needs. It is therefore important that an employer seeks legal advice as promptly as possible.
If you would like more information on how best to manage team moves issues in your business, please get in touch with your usual Mishcon de Reya contact or a member of our Employment team.