Are your organisation’s employment contracts and restrictive covenants suitable for the new world of work? Do they truly protect business-critical information at a time when competitors could poach talent? Joanna Sutton looks at why your contracts may need modernising.
Over the past two-and-a-half years we’ve seen dramatic changes to our working practices. The move to hybrid working brought on by the pandemic, and the tight labour market which has seen record job-to-job moves as employers compete for talent, have left many employment contracts and staff handbooks out of date.
Relatively few employers have paid heed to the legal implications of home and hybrid working. Generally, the legal aspect is an afterthought, if considered at all, with the assumption being that existing contracts and staff handbooks would cover these new working arrangements. However, this is not the case and there are huge risks to employers if matters such as data protection and the health and safety obligations are not provided for in employment documentation.
Bring your own device policies
For instance, many employees are using their own devices such as laptops and mobile phones when working from home. Whilst this saves the employer the cost of buying further equipment, it means that employees have unlimited access to contact details for clients and customers, often saved on these devices, which they would then be able to access if they were to leave and work for a competitor. Not only is this likely to be a breach of data protection and the privacy notices that the organisation has in place, it also means that commercial information of significant value to an employer can be taken by a departing employee.
Hybrid working employment contracts
Many employers have not revisited their employment documentation since the pandemic hit and would be surprised at how exposed these documents currently leave them. Implementing policies such as a bring your own device to work policy and including contractual provisions to require deletion of information held on devices that do not belong to the employer are essential to combating these risks.
Hybrid working contracts
Many employers have also neglected the health and safety implications of home working, wrongly believing that their responsibilities begin and end in the employee’s usual workplace. This is not the case, and consideration must be given to employees’ physical and mental wellbeing wherever they are working. Employers must undertake a risk assessment and take steps to mitigate any risks, which might include the provision of equipment for the employee to use at home.
Employers should also think carefully before making permanent amendments to their employment contracts to reflect hybrid working arrangements, as it will then be very difficult to change these in the future. We have already seen some organisations try to reduce the number of days employees are permitted to work from home, but it is much more difficult to change arrangements if they are in an employment contract. Instead, it is preferable for a hybrid working policy to set out when an employer can require an employee to attend the office, for example to attend meetings or training, and to state that hybrid working arrangements can be revoked at the discretion of the employer.
A further trend we are seeing is employers wanting to increase the duration of the restrictions in their contracts. Tempting though it might be, a restriction with a duration of more than 12 months is almost certainly going to be unenforceable.”
Another area that has come under the spotlight recently as labour shortages have become more acute is the importance of restrictive covenants to restrain staff from soliciting clients, working for competitors, and poaching other employees. The latter type of restriction is growing in popularity and clauses preventing team moves are now quite often included in employment contracts and settlement documentation.
Restrictive covenants need to be carefully drafted to ensure that they are not too broad and deemed unreasonable as a result. Restrictions intended to prevent team moves are no different and should, for example, be limited to employees with whom the departee had contact, at a particular level of seniority.
A further trend we are seeing is employers wanting to increase the duration of the restrictions in their contracts. Tempting though it might be, a restriction with a duration of more than 12 months is almost certainly going to be unenforceable. Beefing up restrictions is extremely dangerous because if they are found to be unreasonable then a court will strike them out entirely rather than substituting a shorter, more reasonable time period, which would leave an employer with no protection at all. It may seem counterintuitive, in the sense that a longer covenant length is a more effective deterrent for a departing employee, but deterrence must be balanced against enforceability and some protection is almost certainly better than none.
Another area that is becoming increasingly important to employers is the LinkedIn connections made by staff during working hours.
The case law in this area is still evolving, however potentially this could be classed as confidential information belonging to an employer. While it can be difficult to disentangle social media connections made in the course of employment from those employees make elsewhere, employers should consider amending contracts and handbooks to make specific reference to social media platforms and expressly state that connections made in the course of employment are the property of the employer and must be deleted on request, including upon termination of employment. This avoids a departing employee having access to a virtual address book of contacts via LinkedIn to target when working for a new employer.
The cost to organisations of dealing with problems when they arise usually greatly exceeds the cost of revising employment contracts and staff handbooks. By revising these documents, organisations can often prevent problems arising and put themselves in the best possible position to protect their business, which is crucial in the current economic climate.