High turnover is a growing issue for companies. As I’ve written in the past, the Millennial generation are quick to jump ship for a better opportunity or when they feel the values of the company no longer match their own. Employers need to prepare themselves for the inevitable departures of key employees.
Considerations When a Key Employee Quits
When a key employee quits, while employers may be upset it’s best to put those emotions on the back burner and have a plan. In some situations, it may be worth it to start out the conversation by asking if there is anything the organization can do to retain the employee. If these efforts fail and the employee is for sure on their way out the following are important considerations.
Talk to the employee about how much notice is reasonable. If the employee has an employment contract, this may speak to how much notice they must provide upon resignation, if any. If it does not, ask the employee what he or she thinks is reasonable. In the absence of an employment contract term, there is no statutory obligation for employees to provide any notice.
While many employers find soon to be ex-employees a liability in the office, in certain key roles the company may have a hard time running without them. Depending on the employee’s role, they may have a duty to make sure their transition is smooth and that no harm comes to the company from their departure.
Reasonable notice for a departing key employee has been held to mean the amount of time it would take the employer to hire and train a replacement. Check out the Ontario Court of Appeal’s comments in GasTOPS Ltd. v. Forsyth for more on this.
Confidentiality and Restrictive Covenants
The departing key employee may be subject to certain obligations that will continue beyond the end of their employment. These include confidentiality agreements, non-competition and non-solicitation agreements. Likely the employee would have entered into these agreements as a condition of their employment when they joined the company. It is a good practice to review the terms of these agreements and remind the departing employee of their continuing obligations. If there are concerns, for example, the employee is leaving for a job at a competing company or the employee is leaving and taking existing clients or staff with them, consult a lawyer to review your options.
It is also important to ensure that confidential information about the company remains confidential. Most confidentiality agreements will also prohibit the departing employee from using confidential information about the company for any purpose other than their job at the company.
Protect Digital Data
Key employees likely have wide access to critical company data. Employers will want to take steps to protect data and to verify that data has not been stolen prior to the employee giving notice. IT support should be able to provide information about what the employee has been forwarding or downloading, as well as what devices have recently been connected to the employee’s computer.
The moment when an employee leaves often presents a great opportunity for the employer to get candid feedback on their experience at the company. This feedback can be valuable in helping the company to fix issues that may not be visible to upper management.
Communication to the Rest of the Office
The departure of a key employee can create uncertainty and destabilize the rest of the office, let alone impact the value of the company if the key employee is particularly high profile. The employer should be mindful of the effect that the departure can have and take steps to ensure consistent, positive messaging and a smooth transition plan.
A good set up at the beginning of the employment relationship will go a long way to ensure a smooth ending. Prior to bringing key employees on, or promoting them from inside, employers should prepare employment contracts that address issues such as reasonable notice on resignation, confidentiality, non-solicitation and non-competition.