Resignations: checklist

Charles Urquhart of Clyde & Co LLP continues a series of articles on resignations with a checklist on the practicalities of managing resignations. By taking steps such as: ensuring that contracts include a garden leave clause and restrictive covenants, checking employee notice obligations have been met, managing handovers and conducting exit interviews, employers can help to minimise the negative impact of resignations. 

1. Check and record that the employee has given the correct notice. 

When an employee resigns the employer should check that he or she has given the correct notice, according to the contract of employment. Employers should specify the amount of notice that employees are required to give in the written statement of terms and conditions of employment issued under s.1 of the Employment Rights Act 1996. Under s.86(2) of the Act, employees with at least one month's service must give not less than one week's notice, but if the statement or contract requires more they should give the longer notice stated.

If the employment contract is silent on notice requirements, the employee can be required to give reasonable notice (which must be at least equal to statutory notice). What is reasonable depends on a number of factors such as length of service, industry practice and the employee's seniority.

If the employee has not given the required period of notice the employer can choose either to accept the notice given or to require the employee to give proper notice. It should do so in writing.

Contracts of employment often require employees to give notice in writing. If an employee resigns orally, the employer should check whether or not he or she is required to give written notice. The employee would satisfy a requirement to give written notice by giving notice in a letter, facsimile or email. If the contract does not specify that the employee must give written notice, the employee can give oral notice.

See Resignations: employee notice in this series for more details of employees' rights and obligations in relation to notice.

2. Ensure that the employee returns company property.

Where an employee's benefits include tangible objects such as a company car, or he or she is issued with equipment needed for the performance of the job, such as a mobile phone, Blackberry or computer, it is in the employer's interest to ensure that the contract of employment contains a clause making clear that these items must be returned on termination. The clause should specify that the employer can make a deduction from wages to cover the cost of unreturned items. Although employees are entitled to retain contractual benefits during notice, employers should check that departing employees return any outstanding items at the end of the notice period, and put in place procedures for ensuring that this is done.

A departing employee should be required to deliver items to a manager, and sign a form, which can be countersigned by the manager, confirming that he or she has returned all of the employer's property. This should help to avoid items going missing and the employer being unable to account for them.

3. Take steps to protect important and sensitive business information.

Employees may be in possession of company property such as documents, emails, price and customer lists and other confidential and/or commercially sensitive information. These belong to the employer and employees should return them on termination. Employers should include a clause in the contract to this effect. Employees should be asked to sign a document confirming that they have returned property and that they have not retained copies (electronic or otherwise) of confidential information belonging to the employer. If there is evidence that an ex-employee is using confidential and/or sensitive business information belonging to the employer, it can apply for an injunction to prevent him or her from continuing to do so.

To help to prevent the misuse of confidential business information by ex-employees, employers should consider limiting employees' access to it from the outset. For example, contracts could include a clause prohibiting employees from removing confidential information from the premises (unless they need to do so in the course of their duties). Employees should have access only to information that they need to do their job and confidential information should, where possible, be locked down so that it cannot easily be electronically transmitted.

4. Include clear restrictive covenants and garden leave clauses in contracts.

Many employers include garden leave clauses and restrictive covenants in contracts of employment, to protect their business.

If there is a clause in the contract entitling the employer to put the employee on garden leave the employer can exclude the employee from the workplace for part or all of the notice period, without being in breach of contract. The employer should specify the employee's obligations during, and prohibitions attached to, garden leave.

Restrictive covenants in contracts of employment seek to limit employees' activities post termination. Only those restrictions that are no wider than reasonably necessary to protect the employer's business are capable of being enforceable. When drafting restrictive covenants, employers should tailor each one to the employee concerned. Covenants should limit an ex-employee's activities only to the extent that is necessary to protect the business.

From a practical perspective, as restrictive covenants come into effect only after the employment relationship has ended, there is little that an employer can do to police restrictions other than attempt to monitor the situation and seek to obtain an injunction where there is evidence that an ex-employee is in breach of a covenant. When employees resign, employers should consider writing to them to remind them of the restrictions that apply. If the employer knows that an employee is going to work for a competitor, in breach of a covenant, it may be appropriate for it to write to the new employer and advise it of the existence of the covenant.

See Resignations: protecting the business in this series for more details on garden leave and restrictive covenants.

5. Manage handovers.

Employers need to manage the handover process to ensure that departing employees' duties continue to be performed after they have gone. The employer should make clear the departing employee's responsibilities in relation to the handover. It should give instructions regarding which duties should be handed over, to whom and over what period of time. The employer should also make clear what tasks the employee is expected to complete before he or she leaves.

6. Conduct exit interviews.

Employers should conduct exit interviews with all departing employees as a matter of course, regardless of the reason for the resignation. Exit interviews provide an opportunity to identify problems of which the employer is unaware, before they become an employment tribunal claim, and may result in an employee agreeing to stay if the matter is addressed.

Exit interviews can also provide an opportunity to obtain information from employees. Employees may reveal that they are moving to a competitor, highlighting the need for the employer to monitor the situation in respect of a possible breach of post-employment restrictions.

Exit interviews can also identify areas where the employer may need to make changes to improve employee retention. For example, it may become apparent from exit interviews that, by failing to remunerate staff adequately or provide a particular benefit, the employer is losing staff to a competitor.

7. Manage the performance and attitude of leavers.

During the notice period it is inevitable that some employees' performance and productivity diminishes, particularly where responsibilities are passed to colleagues or a replacement. Some employees may demonstrate a poor attitude and act in a way that damages the morale of remaining employees. During notice employees can be required and expected to work as normal and the usual standards of conduct should apply. Although performance and conduct issues can often be dealt with by way of an informal discussion, employers may be left with no option but to address misconduct through the disciplinary procedure.

8. Ensure employees return their security pass.

Employers need to ensure that departing employees return their security pass before they leave and should make clear who is responsible for ensuring that this happens.

The final article in this topic of the week series will be a case study on resignation and will be published on 1 February.

Charles Urquhart (Charles.Urquhart@clydeco.com) is a solicitor at Clyde & Co LLP.

Further information on Clyde & Co LLP can be accessed at www.clydeco.com.