In recent weeks, a number of commentators have predicted the “Great Resignation”—a mass exodus of employees leaving their jobs following the wake-up call the pandemic has afforded them.
Microsoft research has indicated that almost half of the worldwide workforce is ready to resign this year, with just under 40% of UK and Irish workers saying they are ready to quit. Many have had cause to re-evaluate their careers during COVID and with lockdown restrictions set to ease further, people are considering their options. If the “Great Resignation” is upon us, there are a few things employers and employees should bear in mind.
- Think carefully about when to resign. Whilst the job market is more buoyant in some sectors, things can change quickly. Resigning if you do not have another job lined up is usually inadvisable. Also consider how much notice you have to give. Do you want to leave before your notice period runs its full course so that you can start any new job earlier? If so, would your employer be prepared to release you from your notice early or even pay you in lieu of some or all of your notice period? If not, will you be able to start with your new employer on the agreed start date? Additionally, are you due a bonus or do you have any share options or incentive awards which are due to vest shortly? There may be a point in the year when it is more cost-effective for you, personally, to resign so that you minimise any losses in respect of any unpaid bonus or unvested stock.
- Are you subject to any restrictive covenants? These covenants seek to restrict what you can and cannot do, and who you can and cannot work with, for a period of time after your employment comes to an end. Often employees are subject to these clauses without even realising it. Non-compete, non-solicit, and non-deal covenants can be very onerous for employees (particularly senior executives). If you are concerned about whether these covenants apply or how they may affect your ability to secure another job, seek legal advice before you resign.
- What obligations do you owe to your employer when you resign? All employees owe a duty of trust and confidence to their employer. But the more senior the employee, the greater the degree of fidelity and diligence s/he is required to exercise, and the more likely s/he is to be regarded as a fiduciary. Those who owe fiduciary duties are required to act with the utmost loyalty and good faith, and in their employer’s best interests (rather than their own). If they do not, their employer could sue for damages or seek injunctive relief (to stop the individual joining a competitor, for example). Directors owe fiduciary duties as a matter of statute, but others (such as senior managers or heads of department), may also be fiduciaries. Fiduciaries will be under an obligation to report their own wrongdoing and that of others. This includes any activities which could conflict with the interests of their employer (such as learning of or being involved in a team move, or seeking to set up their own business if that business will or could potentially be in competition with their employer’s). Be mindful of what obligations you owe your employer, before and after you resign.
- If you suspect an employee might resign, what can you do about it? Assess whether you would like to make the employee a counter offer before it is too late. In the post-pandemic working world, a “counter offer” may not just be limited to financial inducement like a pay rise or promotion. To attract and retain the best talent, employers are having to be more creative, so think about other possible incentives like hybrid and (genuinely) flexible working. Also, how are you going to manage the individual’s departure if they do decide to resign? It may be appropriate to put them on garden leave or pay them in lieu of their notice period (although please see the point below). Communication will be important so you may also want to consider internal and/or external announcements, a handover, and the management of client relationships (if the individual has a client facing role, for example, or is particularly senior).
- Ensure your termination provisions are well drafted. Your contracts ought to include express suspension, garden leave, notice, termination without notice and payment in lieu of notice provisions. Employers often run into problems when they pay departing employees in lieu of their notice period or put them on garden leave where there is no express contractual right entitling them to do so. This amounts to a breach of contract which the employee can either waive or accept. If the latter, the employee is entitled to treat his/her employment as terminated and regard him/herself as released from any restrictive covenants which might otherwise bind them. Be sure, therefore, to include suitable provisions in your contracts to guard against this.
- If you are considering entering into negotiations with an individual who is resigning from their current employer, tread carefully. If you enter into discussions with an individual prior to their resignation, and that individual breaches their contract of employment with their current employer, depending upon the facts you could be accused of having induced that breach. In such cases, their employer may be entitled to issue proceedings against you for damages for inducing that breach of contract. Other remedies may be available to the employer. Seek legal advice before you approach individuals and/or the recruitment process begins.