When an employee leaves, the focus is often on their entitlements. But what are your rights as an employer and what practical steps can you take to ensure a smooth exit?
Giving Notice
When it comes to employees giving notice, there are several key areas to note. Employers do not have to ‘accept’ a resignation – it is a unilateral act. Equally, they do not have to accept a retraction of notice, unless it was given in the heat of the moment, or the employee was unwell.
Employees must give at least a weeks’ notice once they have been employed for more than a month. However, longer notice is usually set out in the employment contract.
If the employee starts work for someone else in their notice period, it is possible to obtain an injunction to prevent them starting with their new employer and there is no obligation to pay them if they do not come to work.
Garden Leave
If the contract allows, it may be commercially preferable to put the employee on ‘garden leave’ for some or all of the notice period. During this time, they remain an employee, are not required to attend the office and should be prevented from contacting clients, suppliers and colleagues, but they continue to owe all the usual duties of confidentiality and fidelity to the business. Garden leave must be for a reasonable and proportionate duration only and the contract may reduce post-termination restrictions by the garden leave period.
Payment
Employers may consider making a payment in lieu of notice (PILON) if there is a contractual right to do so. A PILON ends the employment immediately and, depending on the contract wording, can have cost savings for the business if calculated on basic salary only, rather than salary plus benefits. While a PILON can be made without a contractual right, this is a breach of contract and full losses including holiday pay accrued during the notice period must be paid.
Company Property
Employers are also entitled to the return of their confidential information and company property, including passwords and logins, and this should be stated in the employment contract.
Reclaiming Training Costs
Subject to the terms of the relevant schemes, employers can seek repayment of money owed by the employee; for example, season ticket loans or cycle to work schemes. Training costs can be reclaimed, provided the repayment terms are reasonable and proportionate. Check that there is a signed contract confirming that deductions can be taken from a salary, otherwise it is an unlawful deduction.
Restrictive Covenants
Employers can lawfully restrict employees’ activities after the employment ends regarding confidentiality, intellectual property and, in some cases, contacting clients or colleagues and working for a competitor. But restrictions will only be enforceable if they are reasonable and proportionate ways of protecting a legitimate business aim and take into account things like the role carried out by the employee, their knowledge and workforce stability. However, if an employee has been placed on garden leave or paid a PILON without a contractual right, these restrictions will usually be invalid.
Steps for a Smooth Exit
Businesses should check the employment documents and identify their own commercial requirements or risks. For example, does the employee owe the employer any money, or need to sign any intellectual property papers? The exit interview should be used to get some honest feedback from the individual and to remind them, in writing, of their ongoing obligations to the company.
If you need any help and advice in relation to the above, please do not hesitate to contact me or the team on 01133 50 40 30 or at hello@scesolicitors.co.uk.
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SCE Solicitors is a boutique employment law practice based in Leeds which advises clients nationwide. Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.
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