Leaving Employment Part 1
The end of an employment relationship can be a difficult time for employees and employers alike. How difficult rather depends on who is ending it, why it is ending and how it is done. It can be made far easier if both parties understand their rights and their obligations.
This week I want to look at it from the employee’s point of view – what should you be aware of when you leave a job?
If you decide that you want to leave your job you will normally have to give your employer notice. If you work for an operation that has not given you a contract you are required by law to give at least one week’s notice if you have been employed for more than one month. However, normally your contract of employment will specify how much notice you have to give. Employers often require one or three months’ notice, however, in some management positions it is not unheard of for there to be a twelve month notice period. Finally, as I have mentioned before, if your employer has treated you particularly badly and has effectively broken your contract of employment then you can resign without giving notice.
One of the main reasons for resigning is because you have found another job and quite often your new employer will want you to start as soon as possible. This can lead to difficulties, particularly if your current contract requires you to give a long period of notice. Lets take an example.
Philip works as a salesman for a welding equipment supplier – SP Ltd. He is required to give 3 months’ notice if he wants to leave. A new company sets up in competition with SP Ltd and wants to recruit Philip. They ask him to start next week and tell him that they cannot wait for three months.
Philip decides that he really wants to work for the new company because they are offering him more money. He gives SP Ltd one week’s notice and, despite being told by the Managing Director Jane that he is required to work for 3 months, he leaves after a week.
By failing to work his contractual notice, Philip is now in breach of contract and SP Ltd has the option to sue him for that breach. SP Ltd would be entitled to be compensated for loss suffered because of Philip’s breach of contract. The difficulty for SP Ltd is that it is often very difficult to assess whether there has been any loss because Jane will obviously do all that she can as MD to prevent any loss being suffered. Many companies will decide it’s too costly to sue an ex-employee for breach of contract if they fail to work their notice, however, if they were to issue proceedings they would almost certainly win.
A second problem for Philip is that he is leaving to join a competitor of SP Ltd. Now, as Philip has been a key employee of SP Ltd, Jane will be very reluctant for him to join a competitor – not only will he take away with him his experience, he will also take his knowledge of SP Ltd’s business and his industry contacts. This might prove very damaging for SP Ltd.
“So what?” you may think. Philip, surely, is entitled to work for whomever he chooses? Well, this depends on whether Philip has what are called ‘restrictive covenants’ in his contract of employment.
The law allows SP Ltd to include in Philip’s contract a clause stopping him working for a competitor for a certain period of time after his contract ends. However, this restriction must do no more than protect the legitimate business interests of SP Ltd. So it could not stop him working for any welding supplier in the UK or stop him working for a competitor for 2 years. The courts do not like restricting people’s rights to work so restrictive covenants that are considered to be too onerous will not be enforceable. However, if Philip has restrictive covenants in his contract he needs to be careful not to break them. Even if a court decided the restriction was not enforceable, it would cost Philip, and his new employer, a great deal of money to defend a lawsuit from SP Ltd.
What are the lessons? You should generally try and give your employer the notice that is required by your contract. You run the risk of being sued if you walk out early.
If there are restrictive covenants in your contract do not simply ignore them, you may find yourself in court on the wrong end of an injunction and a claim for damages. Take good advice before deciding that you are prepared to break your contract.
One final thought for employers - think carefully about notice requirements. Requiring an employee to give long notice can be counterproductive. You may end up paying someone who doesn’t want to work for you and is making no effort.
