Whatever your reason for seeking a new role – whether you’re looking for an improved package, a fresh challenge, or merely a change of scene – the prospect of changing jobs is an exciting one. There are some crucial legal issues to consider before signing on the dotted line, though.
If you’re a senior executive about to embark on the process of changing jobs, here are our ‘must-consider’ items. This overview will help you to understand both your obligations when exiting and the small print of your new contract.
Changing Jobs: Garden Leave
If you currently hold a senior client-facing position, your notice period is likely to be lengthy (often between three to six months – sometimes more). It’s also likely that your contract will contain a garden leave provision.
Once notice has been given, a garden leave clause permits your employer to require that you stay away from work for the duration of your notice period. During this time, you’re likely to be prohibited from visiting the office (unless formally invited) and contacting clients or colleagues. You’re still employed and bound by the terms of your contract until the termination date, though – meaning that you need to be available to work if your employer requires it (to perform a handover with your replacement, for instance). This can be difficult to manage; mentally you’ve already committed to the change, yet you feel restrained from moving forward. A sense of clarity about what you can and can’t do during garden leave can ease the transition and help you manage your time effectively.
Being put on garden leave is fairly standard within certain industries (such as financial services); there’s usually nothing personal about it. It simply allows an employer to maintain valuable client relationships and protect their interests.
Changing Jobs: Post-Termination Restrictions
Whilst reviewing your existing contract for garden leave provisions, we recommend that you also consider any post-termination restrictions, or ‘restrictive covenants’. Again, in senior roles these are fairly common – but the terms can vary.
There are four main types:
- Prohibition on joining or operating a competing business.
- Prohibition on soliciting clients.
- Prohibition on dealing with clients.
- Prohibition on poaching staff.
Restrictions typically last for a number of months after the end of employment, but are reduced by any time spent on garden leave.
The restriction on ‘dealing’ with clients is an interesting one, and can be tricky to manage. Should a client instruct you at your new place of work without you first approaching them, this would not be classed as soliciting – but it would count as dealing. You’d also need to tread carefully if it turned out that your new and previous employers shared clients, even if these relationships were pre-existing.
As with garden leave provisions, these clauses are designed to protect an employer’s interests. However, they are subject to strict rules of interpretation and will be unenforceable if they go beyond an employer’s legitimate interest and what is deemed to be reasonable. We recommend that you take legal advice if you are concerned that your contract is unreasonably prohibitive.
That said, it’s important to note that if you breach valid restrictive covenants, your old employer could seek an injunction and financial damages against you (and, in some circumstances, your new employer). Clearly this is not a good way to start a new relationship; so, again, do seek specialist advice if you are at all uncertain about your obligations.
Changing Jobs: Confidential Information
By the time you come to leave an employer, you’re likely to have spent weeks, months, or even years developing key business relationships; as such, you may view certain customers as ‘your’ clients. This may be a natural assumption, but from a legal perspective it’s incorrect. In fact, these client relationships – and any valuable confidential information pertaining to them – are your employer’s property.
As an employee, you have a duty not to disclose or misuse your employer’s confidential information. This responsibility is quite broad, and covers client intelligence, pricing and order histories. Departing employees can trip up by taking this kind of information to use in their new role; and it is not uncommon for employers to perform forensic IT analysis to check whether confidential information has been downloaded. You can still be fired for gross misconduct when you’re on notice, and employers can seek injunctions and damages where their confidential information has been misused, so it is important to adhere to your confidentiality obligations.
Changing Jobs: New Contract
Out with the old, in with the new! It’s important to scrutinise your new contract carefully before signing up. As well as assessing the commercial terms, take time to consider:
- Any issues that have arisen during exit that you’d like to avoid in your new job.
- Your notice period, particularly in conjunction with post-termination restrictions and garden leave provisions. If you’re likely to be put on garden leave if you hand in your notice, you may wish to try and align your notice period with the duration of any post-termination restrictions; as they would run in parallel, your restrictions would expire at the same time as your paid garden leave. Bear in mind, though, that if you have to work your notice period your post-termination restrictions would not come into effect until after your termination date.
- Remuneration: new contract. In many industries a package is likely to include bonuses as well as salary. With this in mind, make sure that you are clear about whether these are guaranteed or discretionary. This applies to signing-on bonuses as well as your general remuneration package.
- Remuneration: old contract. Before resigning from your current role, check the provisions about payment of any bonuses. It is likely that these will only be payable if you are still employed and not under notice on the payment date, which could influence your decision as to when to give notice.
If you’re looking for expert legal advice in relation to an impending job change, Bellevue Law are here to help. Contact our employment law specialists today for a no-obligation chat about your current situation and future plans.
Disclaimer: This material is a general overview only, and is not intended to provide legal advice.