Staff retention: It could be you losing out with lottery winners

To lose a top team virtually overnight would be extremely bad luck. But when the loss is caused by a jackpot lottery win, the correct response would be warm congratulations, wouldn’t it? Virginia Matthews reports.

Last December a 16-strong syndicate at Warwick-based Hale Products Europe, which employs 75 staff and makes specialist equipment for the emergency services, won a share of £7.6m – a cool £475,000 each.

While none of them – mostly shop floor workers – resigned immediately (some have subsequently) the disruption to other staff and to the business as a whole was considerable, says Mark Noel, operations director.

“For several days we had TV crews and press people coming to interview the winners on-site and, of course, everybody else in the building wanted to share in the excitement too.”

“Although Camelot (the National Lottery operator) helped us manage the publicity process, I would say that the win was a major distraction for some time afterwards, and the problems have continued,” Noel adds.

“We always require people to work extra hours when we are busy and this is understood by staff. But some of the lottery winners have been extremely reluctant to do their share,” he says.

Although Hale Products Group hasn’t banned staff syndicates, the impact of the win is difficult to manage, Noel adds.

What are the odds?

But what are the chances of an employer having specific procedures in place to protect the organisation against the impact of a jackpot win? Almost zero, says Richard Nicolle, partner in employment benefits and practice at law firm Denton Wilde Sapte . “It would be like having procedures to manage an asteroid attack, which is about as likely,” he says.

Unlikely as it may be, the possibility of losing a chunk of staff to the lure of the lottery win is probably enough to send even rational HR practitioners into turmoil. So what protection do employers have in the event of a staff syndicate win?

“In general terms, if an employee wins a fortune and decides never to come to work again, there is little a court can do to compel them,” says Nicolle.

“While this would not be an issue with a relatively junior member of the team on short notice periods of perhaps a week, the situation is far more complex with senior people on six-month notice contracts,” he adds.

“If your lottery winner is the head of IT, say, and their departure may threaten the health of the business or even prevent you from participating in important pitches, there may be grounds for a breach of contract action, just as if they had gone to work for a competitor.”

“If you were aware that this person had recently won several million on a Euro Rollover game it may also be worth your while to look for damages,” Nicolle adds.

Before you start panicking, however, Camelot has some reassuring findings. The lottery operator claims that 52% of big jackpot winners actually choose to stay at work for several months after their numbers have come up, even if they subsequently quit to enjoy a millionaire lifestyle. So employers should have a bit of time to work out what to do in the event of a senior-level employee or team leaving.

“We are very conscious though that for smaller, perhaps family-run firms, the level of media interest in a jackpot win can be intimidating, particularly so if it involves a large or otherwise significant group of employees,” says Dot Renshaw, head of player services at Camelot.

“Some organisations are happy to have press conferences on the premises because it can be good publicity for them, and because it can even attract new and curious clients who want to meet the latest multimillionaires and hope the good luck will rub off.”

“Others, though, are very wary of being involved in any way and ask us to make alternative arrangements to limit disruption.”

Renshaw adds: “There is often concern that winners will resign en masse, and there may well be jealousy among other workers to deal with. But here at Camelot, we do our best to minimise any inconvenience to winning syndicates’ employers.”

Big winners do also tend to be disproportionately drawn from among the lower-paid staff, Renshaw says, although Nicolle believes this is irrelevant.

“The sudden departure of a whole group of people from a smaller firm can be highly negative, regardless of their level of seniority, but in truth, there is very little an employer can do, short of taking out insurance.”

Insuring the cost

Insurance brokers Lloyds of London have already caught on to this and offer employers cover for losses sustained by lottery wins, but a spokesman was unable to give details of numbers of policy-holders or payouts.

It confirms, however, that payment is triggered when two or more staff win at least £100,000 each, and leave within 14 days, and it includes a payout of between £25,000 and £500,000 to cover the cost of hiring temps or recruiting new staff.

Despite the problems that can follow in the wake of a syndicate’s luck, Camelot argues that encouraging staff syndicates can boost profits. A survey of 1,029 workers undertaken by the company last year found that 76% of employees believe that taking part in “non-work activities” such as lottery syndicates boosts productivity and binds teams closer together.

Camelot claims that the feeling of togetherness which comes from lottery syndicates was worth as much as 14% per year, or about £163bn in 2007 from improved productivity.

While a few employers, including some parts of the NHS, already offer in-house lottery schemes as a staff perk – not all of them connected to the National Lottery – it is far more common for employees to organise a syndicate themselves. The attitude of retail giant Boots is typical: “Boots doesn’t have one overriding lottery scheme,” says a company spokeswoman. “While individual departments may have their own syndicates, it would be the decision of the individuals concerned as to whether the information was publicised in the event of a win.”

One thing is for certain though, employers certainly don’t have the right to discourage or ban staff from forming syndicates.

“I would never recommend that a firm attempt to outlaw syndicates from the premises because it would be unenforceable. A court would consider you very draconian if you attempted such a ban and you could even find yourself the subject of an unfair dismissal claim in the future,” Nicolle warns. “A ban on worker syndicates would be unenforceable and would cast you in the roll of number one killjoy.”

Lottery facts

  • One in four jackpot-winning tickets across all draw-based games including Lotto, Euro Millions and Dream Number have been purchased by staff syndicates to date.
  • The National Lottery has given away more than £29bn in prizes and created more than 2,000 millionaires and multi-millionaires since its inception in 1994.
  • The trade union Unison says: “In-house syndicates tend to be employee-initiated, and while we wouldn’t want to see them specifically written into people’s contracts, nor would we think it appropriate for employers to attempt to legislate against big wins. They are far too popular for that.”
  • If you are a small organisation worried about the impact of a syndicate win, a specialist insurance policy might be your best bet.
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