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Employees' entrepreneurial ambitions should be embraced

Companies should engage with an increased climate of entrepreneurship, employment law partner at international law firm Taylor Vinters Anita Rai hass told HR magazine.

She warned that, with increased numbers of employees now interested in launching their own side-line businesses, employers need to have policies in place to capitalise on this, rather than risk losing staff to what may eventually become competitor enterprises or risk depreciating employee engagement levels. 

Rai added that more carefully considered restrictive covenants in employment contracts would help protect against intellectual and creative capital being compromised. 

“We’ve seen a huge increase in new start-ups needing legal advice,” Rai reported, adding: “I can’t believe how many people I know who have a side-line business alongside their day-to-day profession. People now feel less secure in their roles or are looking for a new challenge, and so start thinking about having a go at the whole Dragons' Den thing.”

“The risk is that they then become less engaged in their day job. And that of course is already a huge problem for companies: keeping their employees interested and happy.”

Rai recommended that employers ward against this by embracing people’s enterprising ideas where possible. “Maybe an employer might want to appoint someone who’s a dedicated ideas person that employees are free to approach and explore ideas with,” she said. 

“Because most people do not know how to bring their ideas to fruition, they might be open to developing their idea with their employer. This will help the employer keep a hand on what is going on with their employees and how they are feeling, as well as potentially lead to interesting business opportunities. 

“We allow our staff to explore new ways of doing business with clients, or even look at new business models. It’s about encouraging creativity and different ways of thinking that keep the team happy and challenged.”

On ensuring the success of this kind of initiative, Rai added: “It’s obviously important to reward enterprising employees so they do not think that their ideas have just been pinched.”

Rai explained that companies may want to consider “tweaking” the wording of their ‘outside business interests’ clauses in employment contracts.

“If employers are going to embrace an entrepreneurial culture with their employees, they may want to re-visit this clause and tweak it to demonstrate that the employer might be able to offer support but strictly subject to employees seeking prior approval and being transparent about any outside interests,” she said.

She said that, in light of the fact that most companies’ most valuable assets are now intellectual and people-based, businesses should join a growing trend of organisations looking more closely at restrictive covenants.

“At one time covenants were an unknown and employers would just say ‘yes this employee has taken our confidential information or clients to their next company but there’s nothing we can do about it'. But now we see many more savvy, courageous employers realising that covenants can work for them if they have been properly drafted, and they sometimes choose to send a powerful message to their employees by progressing a serious breach of covenants to injunction level.” 

Rai said: “It’s those people in your workforce such as your sales director and your business development director who understand your strategy and know all your clients; those are the 'high risk' people who should have bespoke restrictive covenants stated in their contracts.”