Redundancy & when staff become your competition
The employer advice you need to know this week:
I need to make five of my staff redundant. What do I do?
First, you must try to think of another way to continue without making redundancies. If not, can you make fewer than five?
When you have to make redundancies, make a detailed business plan setting out your plans. As you aim to make under 20 people redundant, you must consult with staff to explain the situation and discuss ideas.
Then, make fair and objective selections of who to make redundant. Give all staff proper notice and pay, and give everyone the right to appeal your decision.
My company has new staff after a completing TUPE takeover. Can I change their contracts?
Under TUPE regulations, you can’t change terms of contract when staff change employer. It’s a protected employment right.
But you can make changes if you have an economic, technical or organisational reason (ETO), as long as your employees agree to it. For example, you may get new technology that replaces some people you employ.
My employee is setting in competition with me. What can I do?
Is your employee only planning to set up as a competitor at the moment? If so, there’s no breach of contract. But it will be gross misconduct if they’re already using your confidential information or trade secrets.
If your employee has already started the business, they’re in breach of an implied (non-written) term of their contract—that they serve you in good faith and fidelity.
For future protection, include in staff contracts what’s known as a restrictive covenant. A ‘non-compete clause’ is a reasonable restriction stopping staff setting up in competition with you.