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What are the legal implications of job change? Part 2.

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Path through green grass

This is a guest blog – part 2 of 2 by Michael Scutt who is an employment lawyer. It explores garden leave, restrictive covenants and bonuses.

Garden leave
Another option open to employers is to place the departing employee on garden leave. This means that the employee remains just that, an employee for the duration of the notice period. The only difference is that they remain at home and will not be doing any work. Whilst on garden leave, the employee is entitled to continue to receive all salary and benefits but they must not compete against the employer or work for anyone else. A garden leave clause can be a most effective way of keeping an employee out of the job market and is likely to be more enforceable than a restrictive covenant.

Restrictive covenants
Restrictive covenants come in various forms. Basically it is a type of clause that seeks to prevent the departing employee from undermining the business after they have left. Common restrictive covenants include non-solicitation of clients or prospective customers, non-poaching of colleagues and non-competition clauses. They can be for varying periods of time, such as one, three or six months, but the longer the duration, the more unlikely it is that clause would be enforceable, particularly with a non-compete clause which seeks to prevent an employee from working in the same business. This is a very complex area and close scrutiny needs to be given to such clauses if you are the employee seeking to leave. Traditionally the courts have been reluctant to enforce restrictive covenants and will only do so if they protect a legitimate business interest of the employer. In other words, a non-compete or non-solicitation clause against a senior salesman is likely to be more enforceable than against a receptionist or back office administrator with no client contact.

Discretionary bonus
Don’t forget about any bonus that may be due. Many contracts of employment will contain a provision that the employee is paid an (often discretionary) bonus provided they remain in employment or are not under notice at the time the payment is made. Consequently, before handing in your notice you need to check to make sure that you will not be forfeiting that bonus if you leave at that time. In some cases it may be possible to negotiate for your new employer to pay you the bonus you are otherwise forfeiting in joining them, but that is a rare situation.

Finally, in some employment contracts you will find a provision that states you will bring the existence of restrictive covenants in it to the attention of your new employer. If there is subsequently a dispute and you fail to notify the new employer of the relevant clauses in the contract, it could lead to you being sued by the old employer, who will probably also take action against your new employer.

In summary then, when considering changing jobs it is worth checking your existing contract of employment and, if necessary, take advice from an employment lawyer. At the same time you could also take advice on the terms of the new contract you are being asked to enter into so that you are forewarned for any future issues that may arise when you finally move on from that employment.

In case you missed it, here is part 1:

http://liberateyourtalent.wordpress.com/2013/08/11/what-are-the-legal-implications-of-job-change/

Michael Scutt is an employment solicitor with Excello Law. (http://www.excellolaw.co.uk/solicitors/michael-scutt/) He can be contacted via mscutt@excellolaw.co.uk or (01707) 471030 or 0845 257 9449 Follow Michael on Twitter https://twitter.com/michaelscutt

What are the legal implications of job change?

By //  by 

Careers next exit signpost

Thinking of changing jobs or know someone who is?

At a career crossroads, whether changing jobs or becoming self-employed, it is important to make a robust decision, having thought about all the implications of your planned change. These implications need to include legal ones which affect your rights and choices.

This is a guest blog, part 1 of 2, by Michael Scutt who is an employment lawyer. It explores the employment law implications of changing jobs, specifically your notice period.

Changing your job can feel a risky and anxious experience. There may be many reasons why you are changing your job; dissatisfaction at a lack of prospects, wanting more pay or responsibility, feeling undervalued or simply relishing a new challenge. However, for some, there can be truth in the old adage of “better the devil you know”. For the more risk averse, making the decision to leave voluntarily can therefore be a daunting step.

In many situations, the decision to change jobs can be forced upon an employee by redundancy or dismissal, but whatever the reason for departure from one job, it is never an easy step psychologically.

So what are the legal issues you need to think about before ‘jumping ship’?

Your notice period
The first step is to look at your contract of employment. How much notice do you have to give before you can leave? In many cases, and it depends on your seniority in the business you are leaving, your notice period may be no more than one month or, depending on length of service, one week per year of service up to a maximum of 12 weeks (being the statutory notice due). In other cases, particularly with more senior employees, the period of notice you are required to give maybe three or even six months. Only very senior employees might be required to give 12 months notice.

In the absence of anything in writing, the statutory provisions will prevail being such period as is ‘reasonable’ in all the circumstances. You should not work for a new employer until your notice period has expired. Again, a look at your employment contract will tell you whether your employer can pay you in lieu of notice (called a ‘PILON clause’), meaning they can pay you the money you would have received during your notice period (had you served it) in a lump sum. If there is no PILON clause in your contract, your employer may be able to pay you the value of the notice period gross of tax and National Insurance contributions.

However, if you are the one who instigated the move, it is unlikely that your employer will wish you to leave so quickly, particularly if there is any risk that you might take their clients or customers with you to your next job. On the other hand, if the employer is terminating your employment, perhaps for reason of redundancy, they may be prepared to pay you in lieu of notice. If the departure is likely to be amicable, then it can be worth speaking to your employer to negotiate the timing of your exit.

When considering changing jobs, it is worth checking your existing contract of employment and, if necessary, take advice from an employment lawyer. At the same time you could also take advice on the terms of the new contract you are being asked to enter into so that you are forewarned for any future issues that may arise when you finally move on from that employment.

Visit this blog again in two weeks for part 2 which explores garden leave, restrictive covenants and discretionary bonuses.

Michael Scutt is an employment solicitor with Excello Law. (http://www.excellolaw.co.uk/solicitors/michael-scutt/) He can be contacted via mscutt@excellolaw.co.uk or (01707) 471030 or 0845 257 9449. Follow Michael on Twitter https://twitter.com/michaelscutt