Employment contracts
Discussion
The time has come for us to actually draw up proper employment contracts for the first time.
Where can I get some templates or sample contracts - nothing fancy, but we want to have useful (and enforceable) restrictive covenants (since our staff do get to work very closely with clients) and if possible something to stop them from being poached by clients.....?
Where can I get some templates or sample contracts - nothing fancy, but we want to have useful (and enforceable) restrictive covenants (since our staff do get to work very closely with clients) and if possible something to stop them from being poached by clients.....?
If you want something with specific clauses, then a template wont be of much use.
The usual stuff such as holiday allowances, place of work, duties etc of course depend on what deal you are offering. I think on one of the DTI websites there is a list which is the minimum necessary ones.
With the situation of a client poaching your staff, that is a little more complicated, and would depend on your exact situation and what you were trying to protect.
There is also the factor that such clauses will be deemed to be unfair and thus unenforcable if they are too wide ranging. What exactly is the situation?
The usual stuff such as holiday allowances, place of work, duties etc of course depend on what deal you are offering. I think on one of the DTI websites there is a list which is the minimum necessary ones.
With the situation of a client poaching your staff, that is a little more complicated, and would depend on your exact situation and what you were trying to protect.
There is also the factor that such clauses will be deemed to be unfair and thus unenforcable if they are too wide ranging. What exactly is the situation?
Well - we provide remote and onsite network support. We are a small company and historically have not needed proper employment contracts because it's been a really close-knit team. We are expanding and so need to start employing people who we don't know well and so we can't really rely on personal relationships any longer.
Regarding poaching and so on - because we do a good job, customers are frequently approaching our staff and offering them jobs. I wondered if perhaps this is best addressed through contracts with the clients rather than the staff but it's hard enough getting clients to sign anything, and staff will often be working at sites where no contract is in force (ie ad-hoc consultancy as opposed to support).
In terms of restrictive covenants - I just think it's appalling that you could spend 7 years building up a business, and then one of your staff can leave and try to nick all the customers. We are becoming increasingly vulnerable to this as we recruit more staff - the initial team just wouldn't do something like that. Again there are other ways to address this (ie make sure that the management have the relationship with the client instead of the engineers having the relationship - but this isn't how it works in practice. It's the engineers that are in constant contact with the clients, and the clients know that the staff are the ones with the skills that they need. Obviously in real life there's a little more to it than just having the technical skills - but a rogue ambitious tecchie wouldn't realise that until it's too late, but by then the damage is done if they've managed to nick some of the clients by offering the "same" service from the same people for less money.)
Regarding poaching and so on - because we do a good job, customers are frequently approaching our staff and offering them jobs. I wondered if perhaps this is best addressed through contracts with the clients rather than the staff but it's hard enough getting clients to sign anything, and staff will often be working at sites where no contract is in force (ie ad-hoc consultancy as opposed to support).
In terms of restrictive covenants - I just think it's appalling that you could spend 7 years building up a business, and then one of your staff can leave and try to nick all the customers. We are becoming increasingly vulnerable to this as we recruit more staff - the initial team just wouldn't do something like that. Again there are other ways to address this (ie make sure that the management have the relationship with the client instead of the engineers having the relationship - but this isn't how it works in practice. It's the engineers that are in constant contact with the clients, and the clients know that the staff are the ones with the skills that they need. Obviously in real life there's a little more to it than just having the technical skills - but a rogue ambitious tecchie wouldn't realise that until it's too late, but by then the damage is done if they've managed to nick some of the clients by offering the "same" service from the same people for less money.)
Edited by zadumbreion on Sunday 31st December 00:07
zadumbreion said:
The time has come for us to actually draw up proper employment contracts for the first time.
Where can I get some templates or sample contracts - nothing fancy, but we want to have useful (and enforceable) restrictive covenants (since our staff do get to work very closely with clients) and if possible something to stop them from being poached by clients.....?
Where can I get some templates or sample contracts - nothing fancy, but we want to have useful (and enforceable) restrictive covenants (since our staff do get to work very closely with clients) and if possible something to stop them from being poached by clients.....?
I've been tied in by a number of these types of contracts myself. In my experience, very few of them are worth the paper they are written on, and could be wriggled out of if an employee went to a solicitor. If anything in a contract, could be viewed by a court, as preventing a person from earning a living, and be judged unreasonable, then the issuer is p*ssing in the wind legally. Best advice is no restrictive covenanats lasting longer than 3 months, and be prepared for your lawyers to get rich trying to make them stick.
zadumbreion said:
Well - we provide remote and onsite network support. We are a small company and historically have not needed proper employment contracts because it's been a really close-knit team. We are expanding and so need to start employing people who we don't know well and so we can't really rely on personal relationships any longer.
Regarding poaching and so on - because we do a good job, customers are frequently approaching our staff and offering them jobs. I wondered if perhaps this is best addressed through contracts with the clients rather than the staff but it's hard enough getting clients to sign anything, and staff will often be working at sites where no contract is in force (ie ad-hoc consultancy as opposed to support).
In terms of restrictive covenants - I just think it's appalling that you could spend 7 years building up a business, and then one of your staff can leave and try to nick all the customers. We are becoming increasingly vulnerable to this as we recruit more staff - the initial team just wouldn't do something like that. Again there are other ways to address this (ie make sure that the management have the relationship with the client instead of the engineers having the relationship - but this isn't how it works in practice. It's the engineers that are in constant contact with the clients, and the clients know that the staff are the ones with the skills that they need. Obviously in real life there's a little more to it than just having the technical skills - but a rogue ambitious tecchie wouldn't realise that until it's too late, but by then the damage is done if they've managed to nick some of the clients by offering the "same" service from the same people for less money.)
Regarding poaching and so on - because we do a good job, customers are frequently approaching our staff and offering them jobs. I wondered if perhaps this is best addressed through contracts with the clients rather than the staff but it's hard enough getting clients to sign anything, and staff will often be working at sites where no contract is in force (ie ad-hoc consultancy as opposed to support).
In terms of restrictive covenants - I just think it's appalling that you could spend 7 years building up a business, and then one of your staff can leave and try to nick all the customers. We are becoming increasingly vulnerable to this as we recruit more staff - the initial team just wouldn't do something like that. Again there are other ways to address this (ie make sure that the management have the relationship with the client instead of the engineers having the relationship - but this isn't how it works in practice. It's the engineers that are in constant contact with the clients, and the clients know that the staff are the ones with the skills that they need. Obviously in real life there's a little more to it than just having the technical skills - but a rogue ambitious tecchie wouldn't realise that until it's too late, but by then the damage is done if they've managed to nick some of the clients by offering the "same" service from the same people for less money.)
Edited by zadumbreion on Sunday 31st December 00:07
The first 'ringing bell' I hear is that there has not been a historical need for contracts. Despite it being a legal requirement for an employee to see their terms of employment in writing, you leave yourself open to a lot of potential problems. This is perhaps even more import ant if it is a close-knit team of maybe friends or family - a contract defines exactly what is needed from both parties.
That fact that you do not have a system of contracts means that if there was a problem and an ex-employee got a solicitor involved you would be 'ripped apart' for not having terms of employment in place, and not only is this a seed for misunderstanding, it is also open to abuse. I would use this chance to get contracts for *everyone*.
With regard to the 'mutiny' situation, on the internet somewhere there is a fable by Aesop about 'The Sun and the Wind' which sums this up perfectly:
"The Wind and the Sun were disputing which was the stronger. Suddenly they saw a traveller coming down the road, and the Sun said: "I see a way to decide our dispute. Whichever of us can cause that traveller to take off his cloak shall be regarded as the stronger. You begin." So the Sun retired behind a cloud, and the Wind began to blow as hard as it could upon the traveller. But the harder he blew the more closely did the traveller wrap his cloak round him, till at last the Wind had to give up in despair. Then the Sun came out and shone in all his glory upon the traveller, who soon found it too hot to walk with his cloak on.
Kindness effects more than severity."
At the end of the day you can put restrictions in you contract but unless these are heeded, enforcable and you have the wherewithall to follow them through thy are pointless in themselves - but more importantly if an employee wants to jump ship for more money or a change there is nothing physically you can do to stop them.
However, being 'The Sun' you can make it so they would never want to leave. My company is in a similar situation. I have an efficient business plan, a huge list of clients, and each person I take on has the potential to 'copy' the plan. Thus in the interview if someone seems to be the highly ambitious type, I make a choice elsewhere.
There are plenty of people who if you pay them handsomely and give them better benefit and conditions than they could hope for elsewhere they will not want to leave. As the years go on you reciprocate their loyalty and growing expertise with more responsibility and more pay. If you want to protect yourself a bit more you could put in a clause which means that communicating with anyone they are sent to for freelance work is gross misconduct and a breach of contract. If you want to be a bit more mercenary (and clever) about it, instead of that you could include a clause whereby if an employee does work for a company they have been sent to within a year of leaving, and subsequently your contract ends that they agree to pay damages for 5 years worth of what the contract would have brought you in.
Such 'deals' are much more often adhered to as the consequences are fully known, and easier to sue against as the damages have already been agreed.
I agree with much of what you say. I believe myself to be a fairly enlightened employer in those terms already. We have a very flat informal structure, everyone is given as much responsibility as they want and we have no politics. The atmosphere is extremely friendly and I tend to "discus and vote" rather than "mandate". There is an annual bonus paid to everyone based on the company's performance and salaries are at the high end of market rates. Fortunately as a tecchie myself I am able to lead by example, whether in terms purely of technical skill or in terms of willingness to work late / on weekends when required.
However there will always be someone out there who is prepared to pay more so paying staff generously cannot guarantee that they will stay, even if you've also taken pains to cultivate as enticing an atmosphere as is possible. And people (as in this case) do sometimes just need to move on, to broaden their horizons, move abroad etc.
In terms of contracts, I'm aware of the legal position but in terms of risk, it really has not been a danger to date because the team I have is a team I had in a previous business which we sold and which then went bust when the new owners turned out to be morons. We haven't had any staff turnover (until now) for about 5 years (which I think indicates happy staff).
In terms of the original question though, I don't really want to spend several thousand pounds on a solicitor who will do no more than pull four or five paragraphs out of existing contracts and stick them together in mine. I realise that restrictive covenants in particular are tricky but there has to be a fairly standard wording that should generally be enforceable for at least (as has been suggested) 3 months. There has to be some protection available to business owners.
However there will always be someone out there who is prepared to pay more so paying staff generously cannot guarantee that they will stay, even if you've also taken pains to cultivate as enticing an atmosphere as is possible. And people (as in this case) do sometimes just need to move on, to broaden their horizons, move abroad etc.
In terms of contracts, I'm aware of the legal position but in terms of risk, it really has not been a danger to date because the team I have is a team I had in a previous business which we sold and which then went bust when the new owners turned out to be morons. We haven't had any staff turnover (until now) for about 5 years (which I think indicates happy staff).
In terms of the original question though, I don't really want to spend several thousand pounds on a solicitor who will do no more than pull four or five paragraphs out of existing contracts and stick them together in mine. I realise that restrictive covenants in particular are tricky but there has to be a fairly standard wording that should generally be enforceable for at least (as has been suggested) 3 months. There has to be some protection available to business owners.
PS - interesting comment you make about hiring ambitious staff. I used to worry lot about employees nicking the business (particularly when we acquired another small business where the staff had no reason to feel any kind of loalty at all towards us) but as someone pointed out - most people are just not the type who are going to go it alone. Most people are satisfied if they are getting the salary they want and the working conditions are good.
I dont think it would need a solicitor to put the contract wording in place. As long as it is in english and makes sense that is just as good as a 'solicitors version'.
A lot of small business owners seem to be wary of 'contracts' and writing them but it really isnt as difficult as it sounds. In fact, writing the contract yourself in plain english means that you wont have to hire the same solicitor back again when you need to understand the terms yourself, or explain it to the employees!
www.bytestart.co.uk/content/legal/35_2/guide-to-employment-contracts.shtml
Thats a good link to get you started!
A lot of small business owners seem to be wary of 'contracts' and writing them but it really isnt as difficult as it sounds. In fact, writing the contract yourself in plain english means that you wont have to hire the same solicitor back again when you need to understand the terms yourself, or explain it to the employees!
www.bytestart.co.uk/content/legal/35_2/guide-to-employment-contracts.shtml
Thats a good link to get you started!
OK thanks.
Actually I was mulling this over in the car earlier today - I really can't see why there should be a problem enforcing restrictive covenants if they are restricted to existing clients of the business. When I sold my previous business, the contract I signed included a restriction that I could not carry out the business of providing IT support anywhere in the South for a year - my solicitors advised me that whilst normally this would be considered unenforceable, in the context (ie they have just paid me a significant amount of money to acquire my business) it would probably hold. But if you're just trying to prevent departing staff from approaching your existing clients - surely that isn't unfair and won't prevent them from earning a living? They just have to do it with their own clients...
Actually I was mulling this over in the car earlier today - I really can't see why there should be a problem enforcing restrictive covenants if they are restricted to existing clients of the business. When I sold my previous business, the contract I signed included a restriction that I could not carry out the business of providing IT support anywhere in the South for a year - my solicitors advised me that whilst normally this would be considered unenforceable, in the context (ie they have just paid me a significant amount of money to acquire my business) it would probably hold. But if you're just trying to prevent departing staff from approaching your existing clients - surely that isn't unfair and won't prevent them from earning a living? They just have to do it with their own clients...
zadumbreion said:
OK thanks.
Actually I was mulling this over in the car earlier today - I really can't see why there should be a problem enforcing restrictive covenants if they are restricted to existing clients of the business. When I sold my previous business, the contract I signed included a restriction that I could not carry out the business of providing IT support anywhere in the South for a year - my solicitors advised me that whilst normally this would be considered unenforceable, in the context (ie they have just paid me a significant amount of money to acquire my business) it would probably hold. But if you're just trying to prevent departing staff from approaching your existing clients - surely that isn't unfair and won't prevent them from earning a living? They just have to do it with their own clients...
Actually I was mulling this over in the car earlier today - I really can't see why there should be a problem enforcing restrictive covenants if they are restricted to existing clients of the business. When I sold my previous business, the contract I signed included a restriction that I could not carry out the business of providing IT support anywhere in the South for a year - my solicitors advised me that whilst normally this would be considered unenforceable, in the context (ie they have just paid me a significant amount of money to acquire my business) it would probably hold. But if you're just trying to prevent departing staff from approaching your existing clients - surely that isn't unfair and won't prevent them from earning a living? They just have to do it with their own clients...
Agreed.
The difference is that in selling your business would be that what you are selling is really your client base and the ability to get revenue from it. If you were able to set up shop with the same client base the same day, it would in effect make what has just been sold not really worthwhile.
I have personally seen two situations where on leaving a company an employee has left with a copy of their employers database and used this to poach new clients. That would be a completely different kettle of fish and of course bordering on industrial espionage. Of course that is a different proposition again than when one of your guys is on a job and they get offered another job working somewhere else. What you would put in your contract would be what would be 'reasonable' in the circumstances. I think that is is quite reasonable to prevent current employees basically looking to work for you to get clients to line their own pockets.
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