· 4 min read · Features

The dangers of being too trusting


Companies place a lot of faith in their employees as they see them as the future of their business

Unfortunately employees coming and going are part and parcel of any business. HR needs to be wary of anyone leaving; whatever the circumstances and the potential business risks. You do not just need to be mindful of those that leave on bad terms. Even those who resign and depart amicably will be looking out for themselves.

There are some common pitfalls HR professionals should look out for and address early on within the notice period to protect a company’s business interests. Employees who are due to leave have a tendency to take unused holiday, call in sick, be less productive and sometimes create a negative atmosphere within the workplace. However, there are less obvious and more damaging things to consider.

When an employee resigns or is put on notice it's crucial to monitor them no matter their reason for leaving. Businesses have a tendency to leave those working out their notice to their own devices and only take action at the end of the notice period, which in some cases can be too little too late.

It is crucial organisations have a policy in place for when an employee is leaving that enables it to consider if the employee poses any future risk to the company and its reputation.

What can go wrong?

One of the first questions HR should ask themselves is does the employee pose a risk? If yes, can they make a case for gardening leave or pay them in lieu? If you decide to put someone on gardening leave it should be carefully thought-through as to what level of access you will allow them to the company systems, clients and other employees.

With this in mind it is worth considering encrypting key data (if this is not done already), and ensuring that only those who require access have password details. Employees should be encouraged not to create obvious passwords such as their birthday, they should change their passwords often, and if written down not be left on display.

Data breaches do happen within companies, often with rogue employees. The taking of confidential information, for example client lists, should be reported to the Information Commissioner's Office within 72 hours of it taking place.

Other areas that can pose a risk are company mobile phones. Not everyone opts for a company phone and will choose to have their work emails go through to their personal phones as well as strong key contacts on their phones. It is important to ensure that upon an employee leaving they have cleared their phone of work-related content and, for example, email accounts are deleted as well as key clients/contacts removed.

Social media can be overlooked too. While social media can be great for building and promoting a company it can also have its pitfalls, which can include disgruntled employees bad-mouthing a company via Twitter. Ensure you are following and monitoring all employees’ social media accounts from resignation and that they no longer have access to the company account, if they were previously given the authority to do so.

Be diligent during an employee’s notice period. If you suspect them of wrongdoing and your suspicions are reasonable, HR is within its rights to check an employee’s computer or company phone, while being mindful that there may be personal information stored on such devices. An IT expert would be able to inform you of which documents have been accessed and downloaded, printed or emailed or if a USB has been inserted into the computer, for example.

Other things to be conscious of include:

  • Setting up a competing business. Resigning employees may leave the company and set up a competing business. This may not be a concern initially but if they have taken confidential information to assist them in setting up their business (such as client lists or know-how) this will be of concern. It might be providing them with an unfair 'springboard'.
  • Joining a competing business and poaching colleagues. There is a risk of resigning employees joining a competing business and then poaching colleagues to join them. The company is then losing the expertise of these individuals to a competitor. If this is of concern to a company it should include appropriate restrictive covenants in its employment contracts and keep a watchful eye on who worked closely with the departing employee.
  • Poaching clients. The resigning employee could contact clients and seek to poach them. If this is a concern, again, appropriate restrictive covenants should be put into place at the beginning of the employment and client relationship. Also efforts should be made to reinforce client relationships when an employee leaves.
  • Non-recovery of business equipment. There is the risk that a resigning employee may not return business equipment that's valuable in its own right (such as laptops or smartphones) but, more importantly, that may contain confidential information a company will need to protect.

What can HR do if something goes wrong?

Ideally a company will have appropriate and reasonable restrictive covenants they can rely on in the event of any of the above happening.

In the first instance, HR can write to the individuals in strong terms reminding them of their duties of confidentiality post-termination and also their obligations under restrictive covenants.

At the same time, HR can request that the former employee signs undertakings stating that they will comply with their legal obligations going forward, and inform them of the legal action that will ensue if they do not. However, legal action to enforce covenants can be costly with no guarantee of success – it's better to pre-empt the problem than having to take expensive legal action later.

It is crucial HR is vigilant and not complacent. A company’s reputation could be at stake upon an employee resigning, so ensure that steps are taken early. Don’t let trust overtake good sense.

Laura Livingstone is a partner at Gordon Dadds