Protecting your business from the great resignation | Dentons

There are a number of ways to protect your business during a time of transition. These include:

  • traditional steps to manage departing employees; and
  • cultural steps to attract and retain talent.

We look at both.

1. Managing departing employees

Notice period

When an employee resigns, check their employment contract to see what the notice period is and what your options are at this time. A well-drafted employment contract should contain provisions for “payment in lieu of notice” and garden leave to give the employer some flexibility.

  • Work out notice period: You may be content for the employee to work their notice and hand over tasks to others in the team. This can lead to a smooth transition for you and the employee. You may also consider requiring an employee to use up some accrued holiday in this period to avoid any additional payment in lieu when they leave.
  • Pay in lieu of notice: There may be circumstances where you feel that, to best protect the business, the employee should leave the workplace straight away. Assuming the contract gives you the right, you can terminate with immediate effect and make a payment in lieu of notice. If the employee requests an early release (for example, to start a new role/project), then even without a contractual right to pay in lieu, you can jointly agree to waive the remainder of notice and/or to pay in lieu of the balance.
  • Garden leave: Assuming the contract has the right provisions, you can put the employee on garden leave during notice. The individual continues to be an employee receiving their salary but they are not normally required, or allowed, to come into the workplace, perform their role, or contact colleagues/clients etc. You can normally require an employee to use up accrued holiday in this time too. Garden leave is a helpful way to prevent an employee competing and to keep them out of the market, and is widely seen as more enforceable than relying on post-termination restrictions. Note that properly drafted post-termination restrictions should include an offset for the period spent on garden leave which means the restricted period is inclusive of, and not in addition to, the garden leave.

What can an employer do once the employment has come to an end?

Employers should think ahead to the time of departure when drafting/updating contracts and consider whether to include post-termination restrictions. Once an employee resigns, it is normally too late to consider this. Restrictive covenants often seek to prevent an employee from working with a competitor, poaching staff and dealing with clients for a set period after termination (or after garden leave starts). Restrictions are difficult to rely upon though – the default position is that they are unenforceable as an illegitimate restraint of trade unless they go no further than is necessary to protect the legitimate business interests.

To increase the likelihood of restrictions being legally enforceable, they must be tailored to the individual and role. It can help to keep a note of the rationale for including the specific restriction. Restrictions should be carefully drafted (the courts can be ruthless in striking out poorly drafted terms). They should be kept as narrow in scope and duration as possible: less really is more when it comes to restrictions as it is better to have a limited term that you can rely upon than a term which appears helpfully wide in the protection it purports to give you, but is therefore at high risk of challenge. These are just a few of the key points to bear in mind (and there are a lot of factors that will impinge on the drafting and enforceability of restrictions), and it is always advisable to take advice on the particular circumstances to give the best chance of restrictions being enforced when necessary.

Court action to enforce restrictions (normally by way of interim injunction/interdict first) can be costly and time-consuming. Often disputes will be resolved by commercial discussions to agree a compromised version of the restriction which both parties can tolerate.

2. How to retain and attract talent

The best defence against the “great resignation” is to find ways to retain and attract the right people. That is not all about financial benefits.

Culture

During the COVID-19 pandemic, many employers introduced short-term measures, which in a time of uncertainty made sense. However, employers should now be able to make clear statements about what their culture will be going forward. That ensures existing staff can decide if they wish to stay based on the new policies (is the balance of flexibility, home working and time in the office right for them?) and allows potential candidates to apply for roles with their eyes open. This puts you in the best position to build and retain a talented team whose aspirations are aligned with your organisation’s current culture.

A sense of meaning

Employees more than ever want to feel a sense of meaning in their work. That is a very individual concept, but can broadly be described as feeling like their presence matters, being part of a community and doing something that makes a difference. One way employers can do this is by communicating the organisation’s purpose and then making it clear how individual roles contribute and fit in with this purpose. Employers can also provide training and opportunities to aid personal development and career progression. Consider how long an employee is likely to feel content in a specific role, and what you can do to extend that or offer promotion opportunities.

Flexibility

Many employees value flexibility. This can include flexible working hours and the ability to work from home. Employers should consider their business needs alongside employees’ unique circumstances. This is not just about what type of flexibility is on offer, but also the process for accessing it – are employees given autonomy to freely manage their own day, or are flexible arrangements always formally agreed? Once you have an approach, try to be consistent and communicate it.

Benefits

Benefits are a key component of culture. They can be designed to appeal to a multi-generational workforce: pension provision, health insurance, enhanced paid family leave/fertility support, wellbeing days, carers’ leave and support with illness and menopause, which not only provide a tangible benefit to employees, but also send the message that the business supports its employees.

Many employees will value subsidised social events and making the office an attractive place to work and connect with colleagues.

With many people feeling the effects of the cost of living crisis, financial benefits can be used by employers to support employees. Examples include subsidising lunches, setting up a hardship fund and providing employee discounts.

Conclusion

Communication is key. Employers should communicate with their employees to see what they want and value. This information could be gathered by staff forums and staff surveys. A targeted strategy in response to employee communication is the most effective approach. Once you have designed that strategy, apply it consistently and tell people about it so that you can ensure it benefits your existing staff and attracts new talent.