What contractual matters should an employer consider when an employee leaves?

When an employee leaves there are many issues that an employer has to consider, such as notice periods, handover, return of company property, exit interviews and references. In addition to these practical considerations, there are various contractual matters that an employer needs to consider. These will vary depending on the particular employment contract. An employment solicitor can provide you with legal advice on what you need to do. Following are some of the main considerations.
Termination of contract provisions

Any employment contract will contain terms of how the contract can be terminated by either party. Before giving their notice, an employee should check the terms of their termination clause. Similarly, if an employee’s termination has come at a bad time or in an unsatisfactory way, the employer should check the termination provisions. An employment solicitor can advise on the termination provisions.

Notice periods

The main contractual provision to be aware of is the notice period. Whilst minimum statutory notice periods are provided for by employment law, most employment contracts will specify a certain period of time. It is important that this notice period is adhered to, both for the employer in terms of receiving enough notice to fill the position with a competent replacement and to allow for handover, and for the employee to receive enough notice to look for another job or to receive payment in lieu of notice instead.

It is important to look at what the contract says in relation to payment in lieu of notice. This can only be deviated from in very limited circumstances, such as where an employee is summarily dismissed for gross misconduct. If this occurs, both parties should seek legal advice from an employment solicitor.

Restrictive covenants

Restrictive covenants prevent an ex-employee from seeking work with a competitor or establishing their own business within a certain distance of the employer within a specified time period. They are designed to prevent employees from misusing confidential information or trade secrets of the employer, and/or from soliciting their client base. Many restrictive covenants are disputed in the courts, and an employer should get legal advice from an employment solicitor before using one.

Garden leave

‘Garden leave’ occurs when an employer asks their employee to work out their notice but not to come into the workplace. Whilst on garden leave, the employee stays on the payroll and is still employed. Again, an employer should always use an employment solicitor before including such a clause in the employment contract, as they can give rise to disputes.

Redundancy entitlements

If an employee is being made redundant, the employer will need to work out their redundancy entitlement. A redundancy entitlement may be set out in the contract; if not, the redundancy entitlement set out by law will apply, which is a minimum statutory redundancy entitlement.