How restrictive is a restrictive covenant?

The loft of my home is not somewhere that I venture on a regular basis, but out of the blue I decided to tidy it up.

Deep in the darkness I found a box, well more of a chest with all the paperwork from my past career. We are talking about everything, every offer letter, performance appriasal and even every pay slip from my entire career.

Apart from it being interesting to see just how little I was paid in today’s terms for quite a lot of responsibility most of this paperwork made a quick journey to the shredder. Amongst all the papers for each job there was also a restrictive covenants detailing what I was allowed to do after leaving that employer.

Although I don’t think I ever broke these covenants it got me thinking: just how enforceable are restrictive covenants?

London law firm Mishcon de Reya tell me that UK entrepreneurs believe that restrictive covenants or non-compete clauses as they are also known are vital for protecting their fast growing companies, and that changing the law to remove them would have a negative impact.

The Mishcon de Reya research was prompted by a Government call for opinions and evidence about restrictive covenants that could impact employment legislation.

In April 2016 former Business Secretary Sajid Javid opened a call for evidence seeking the views of businesses and entrepreneurs on whether clauses that prevent an individual from competing against their former employer are stifling opportunities to innovate and grow.

Mr Javid wanted to identify if this type of restrictive covenant is acting as a barrier to innovation and employment, and therefore preventing start-ups from prospering.

Asking the question has created something of a shockwave as differing opinions are aired.

I have seen candidates refuse to sign an employment contract because of the restrictive covenants that it contained on their future employment. I have also seen employers attempt to enforce a non-compete clause with great passion without success. It seems to be an area that employers, employees need to understand better.

Entrepreneurs, say Mishcon de Reya have several concerns:

  • with uncertainty already rife post Brexit, 73% of entrepreneurs also say restrictive covenants are important in attracting and retaining investment which is vital to UK growth.
  • most entrepreneurs (93%) feared that ex-employees would be able to steal clients after leaving employment.
  • almost three quarters (73%) were worried about retaining confidential company information.

Interestingly, while every entrepreneur saw restrictive covenants as valuable assets in protecting their business only two fifths (40%) of them who have been personally subject to a restrictive covenant believe that they are enforceable.

Mike Patterson of Berwins solicitors in Harrogate told me  that he would have expected this figure to have been lower (than 40%). This is simply because non-compete clauses are often poorly drafted and do not properly reflect the role of the employee, and the business interest of the employer that they are seeking to protect. Basic errors can include an unreasonable post-employment time period (more than 6 months) and undefined geographical area.

Marie Walsh of Consilia Legal questions the effectiveness of restrictive covenants. they normally act as a deterrent to former employees either soliciting or dealing with clients or poaching valuable staff. Entrepreneurs, she says are rarely put off from starting a venture because of a restriction in their previous employment contract, and indeed if they are truly entrepreneurial why would they need the contacts and staff of a previous employer?

The survey of employers also revealed that employers think that

  • over a third (38%) believe a lifting of current restrictive covenants would result in reduced investment in UK companies.
  • over 4 in 5 (83%) employers found restrictive covenants valuable in protecting their business
  • limiting such clauses could put businesses at risk as they fear clients would be taken (81%), staff poached (79%) and valuable confidential information lost (50%).

Jennifer Millins, partner in Mishcon de Reya’s employment department said that the courts are already adept at striking a careful balance between an employer’s right to protect its business and an individual’s freedom to work. The Government’s call for evidence, she says, appears to reflect a very one-sided view of restrictive covenants. Our poll shows that the protective qualities of restrictive covenants cannot be downplayed, and that UK business and entrepreneurs value their ongoing existence. At this stage, it is difficult to see how legislation in this area will be beneficial to UK businesses”.

Mike Patterson agrees, whilst there is always the risk that non-compete clauses are open to challenge and potentially unenforceable – he says that they can act as a valuable deterrent to employees to make them stop and think twice about the potential consequences should they decide to leave their current employer and go and work / set up in competition and/or solicit key customers and staff. Therefore, employers of all types should continue to be able to rely on them and include them when needed in employment contracts.

Overall and on balance, Mike doesn’t think that the introduction of new legislation to restrict the use of non-compete clauses will be of benefit to UK businesses and has the potential to create more uncertainty than there already is, as to what can and can’t be relied on.

Marie raises a very practical issue, enforcing a restrictive covenant or non-compete clause is as expensive as any other type of legal action. Many of the enquiries that Marie receives from businesses refer specifically to post termination restraints and their enforceability, however when the issue of injunctions and fees arise particularly legal and court fees the vigour with which these issues are pursued is lessened. Probably 7 of the last 10 instructions she has had in this area have resulted in a letter before action but were then not progressed further on account of the potential costs. Unless the breach causes a significant loss many companies will simply not pursue it further.

It is also worth remembering that for legal action to be successful the claimant must demonstrate a financial loss. If that is proven and damages are awarded the prospects of recovering compensation might as Marie says be poor because of the net worth of any new start up or the employee.

It all seems to make a lot of sense. As an employer you want your employees to respect the value of the information they handle and the relationships that the business has with other employees, customers and suppliers.

There is a case for these types of clauses but they have to be appropriately written and if you are thinking about having them as part of your terms and conditions or employment then you also have to decide if you would be prepared to enforce those clauses. If you don’t enforce them for every employee can you enforce them for any employee

Posted in Employment Law, Restrictive Covenants | Leave a comment

Breaking out of HR admin and landing a ‘proper’ HR role.

When it comes to getting a first job the HR profession is much the same as all the others. You’ll be doing the administration work. You are full of elation that you have finally got a job in a HR department, but little do you know that the real challenges are ahead. Do not get me wrong some people relish and excel at the administration that is a key part of the HR role. For others however, it is a necessary stepping stone to what they see as a real HR role, a business partner role.

For a profession that is supposed to be about developing people we can, like the cobbler, be very bad when it comes to looking after the development of our own new professionals.

I was asked several times during my tenure as volunteer Chair of the CIPD North Yorkshire branch, how did I make the break out of HR admin and into what we now call business partner type activities.

Debbie Pask of PaskPartnership, helped me remember what happened a long time ago. She reminded me that the big mistake that I made was staying in HR admin roles far too long. I started my career in a head office type HR function where everything was strategic and administrative, opportunities to get involved in business partnering activities were limited. I did not have a plan as to what I needed to gain from that environment and did not know how I would know that I had gained it. The longer I stayed the more difficult it became to get out.

Getting out meant taking a role with an organisation that did not the sort of HR department or HR leader from which I was going to be able to learn much, but it meant that I had made the break and got into HR business partnering activities. When I made a much swifter move from that environment it was to an organisation that would probably not have considered me if I had been a candidate with just head office experience.

It was a traumatic experience and perhaps not one that I would recommend everyone taking, but as Debbie says there are numerous ways to make a journey and still arrive at your desired destination.

This could involve taking an interim role, so long as it is with your existing employer and you have a guarantee of employment when that interim role comes to an end.

Paul Duffield from Eyzon Consulting in Leeds says that there are probably 3 main routes that people more successful for moving from administration, shared services roles to more business partnering type activities.

  1. Move internally – you’ll need to build credibility in your potential as well as your current role for people to have the confidence to move you.
  2. Move externally – especially into a smaller environment that does not have the shared services environment and HR professionals are expected to be both administrator and business partner.
  3. Move externally straight into a HR business partner role, difficult to achieve but it is possible.

Someone who did make that move successfully is Elisabeth Soares, HR manager at Fly Dubai in the United Arab Emirates. Elisabeth started as a HR Assistant and worked her way up. Her first experience as a HR Manager was in a temporary role in a not-for-profit organization which she says opened the door for her to secure a permanent HR manager role in an accounting firm.

Elisabeth has introduced quite a structured approach to developing her HR team. A HR officer who demonstrates competence can expect to be offered the opportunity to train alongside a HR business partner so that they can build their skills and obtain a better understanding of what the business partner role entails. After about six months they will be assigned one department to oversee with the support of the HRBP. Then after about a year, they will be considered for promotion to a full time junior business partner role.

Quite a long development programme, but as Elisabeth says it’s all about ensuring that our HR team are equipped with all the skill and knowledge that they will need to be successful. Some people only think of moving up. They do not realise the breath of business knowledge that they need to gain or the level of responsibility and the associated pressures that come with the business partner role

This is the sort of approach that I wish more HR managers would adopt. Debbie Middleton of Middleton Green Executive Resourcing, recognises the difficulties of making the move and suggests that people shouldn’t wait to be asked. Anyone who wants to move from administrative HR into a business partner role should do all they can to get involved with the “business” HR department and ask if they can shadow on disciplinaries/grievances, redundancy consultations.

I am all for asking, after all what’s the worst that can happen?

The aim should be to be able to demonstrate at interview that they are not only aware of the process from an academic point of view, but have done all they can to gain practical experience. The more someone pushes themselves to increase their knowledge the easier they will find it to convince either a current employer or a new employer to have the confidence to take a calculated risk in giving them the opportunity to become a HR business partner.

Everyone tells me how important it is for a candidate for a business partnership role to be able to demonstrate not just their knowledge of HR but also wider business knowledge and comprehensive softer skills like teamwork, communication skills, resilience and tenacity.
It is all too easy for the HR profession to look down on the administrative role of HR shared services departments, but I never regretted the time I spent in HR administration, understanding the mechanisms that makes the HR machine work enabled me to be a better HR professional in every role and environment I have worked.

Paul Duffield perhaps sums it up well; we should not as professionals get hung up on job titles. Like everyone who has ever interviewed candidates for a HR business partner role, I have met some great HR administrators who do some complex work and then met people with a HR business partner job title who are little more than glorified administrators.

The best way to building a successful professional career is to concentrate on the skills, knowledge, experience and attributes that you have and then aim to find a role that will enable you to use them in a way that will enable you to be successful.

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Gender Pay Gap Reporting

From next year companies with more than 250 employees will be required to publish details of the gap in the hourly rates that men and women are paid.

Acas describe the gender pay gap as the average difference between men and women’s aggregate hourly pay. This gap can be the result of differences in jobs and industries, the types of jobs carried out by men and women and differences in the length of the working week.

Accountancy firm Deloitte said the hourly pay gap between men and women of 9.4%, or about £1.30, was narrowing by just two-and-a-half pence a year. At this rate it will be 2069 before the gender pay gap in the UK is closed.

Ironically it is the traditional male STEM (science, technology, engineering and mathematics) jobs in the gender pay gap is smallest although women make up only 14.4% of the STEM workforce.

However, the Deloitte analysis, based on data from the Office for National Statistics, found women earn an average of 8% less in graduate starting salaries than their male counterparts across all (STEM) subjects combined.

Careers that traditionally attract women like health care had some of the largest differences with female graduates earning 14% less than their male counterparts.

The Gender Pay comparison regulations will come into force in 2017 when employers will be required to calculate gender pay gaps over a 12-month period from 30 April, and to make that information public for three years.

Key points

  • The gender pay gap is not the same as equal pay or pay discrimination.
  • The Equality Act 2010 requires all employers who employ 250 or more to calculate the hourly pay for women in comparison to the hourly rate for men.
  • Employers are required to publish the figures on the organisation’s website and submit evidence of compliance annually to the Government.
  • Employers will also need to calculate and publish a separate gender bonus gap.

Gender pay gap reporting was included in the Equality Act 2010 to create greater transparency and fairness between the genders. The up side for employers is that it can also help an employer to build a positive reputation with both existing and potential employees. It is for this reason that all employers need to start thinking about their gender pay gap.

There are an increasing number of measures introduced by Westminster to highlight inequality in pay.

Equal pay deals with the pay differences between men and women who carry out the same or similar jobs. It is these types of organisations that are likely to have a higher gender pay gap. This new gender pay gap reporting differs from equal pay as it is concerned with the differences in the average pay between men and women over a period of time no matter what their role is.

As gender pay reporting deals with the averages between the pay of men and women it will identify those organisations that have achieved equal pay across genders but who have a higher level of men in senior jobs and women in junior roles.

This may not be the result of discriminatory actions by employers it can simply be the consequence of different career and life choices made by employees, based on traditional gender roles, which is a much bigger issue.

Calculating the gender pay gap

Employers will need to calculate the hourly rate for women in comparison to the hourly rate for men.

The hourly rate will be the pay employees receive during their normal pay period in which the 30th April 2017 falls, then employers will need to carry out the exercise every year on the same date.

Pay periods may differ for employees in the same organisation, for example for employees paid weekly it will be the one week around 30th April while for salaried staff it will be the whole month or four-week period in which that date falls.

Employers are required to calculate the percentage difference between the:

  • mean (average) gross hourly pay of women in relation to men
  • the mid-point (median) gross hourly pay value of women in relation to men.

Employers will need to calculate the number of men and women in each pay quartile as this information will also need to be published.

Bonus pay must also be included when they relate to an employee’s normal pay, but bonus payments will be calculated separately. The regulations require employers to calculate and publish a separate gender bonus gap report. Unlike the gender pay gap that looks at the employee’s pay period that includes the 30 April, the bonus gap will include all bonus payments made in the 12 months up to and including the 30th April.

Bonus payments are likely to include such payments as:

  • profit sharing
  • productivity payments
  • performance payments
  • commission.

Publishing the gender pay report

Employers must publish an annual statement on their website and inform the Government about their annual assessment of their gender pay gap. The information submitted to the Government will be accessible to the public. The information must be held on-line for three years.

It is likely that job-hunters will use this information to compare potential employers

Posted in Abeceder, Equality and Diversity, Pay and Benefits, Pay and Benefits | Leave a comment

ClueGo experience turns out to be a treasure worth winning

My good friend Julia Tybura has just telephoned me demanding to tell me about the exciting time she has had today with ClueGo. It’s a treasure hunt based team building event she tells me. Another one I say. No she says this one is different.

Go on then I say, as I settle down for story time.

You have to remember this has been the hottest day of 2016 and rushing around the Southbank, and Covent Garden in London searching for clues is probably not the best way to deal with the heat and humidity.

But Julia has had a great time. It all started with a rendezvous at the London Eye for a briefing, (health and safety etc). Two teams were formed and each was given a pre-loaded iPad and a deadline to by which time they needed to return to the London Eye, when Julia and her team will finish their day with a trip on the Thames Rocket a super-charged boat!

Over two hours Julia and her team run around the Southbank and Covent Garden collecting as many points as possible. After all points mean prizes – so friendly, or perhaps not so friendly competitiveness is the name of this game!

Julia’s team set off along the Southbank, following what were thankfully very easy instructions, looking out for treasure chests, ghosts and zombie icons in the Google map, with the aim of maxing out the number of points they collected.

I tell Julia that it all seems a bit conventional treasure-hunt to me, and she has to agree, but then explains that although the tasks may be similar  posing with a celebrity (or lookalike), interacting with a statue, taking unusual and creative selfies, getting a copy of yesterday’s newspaper and a black jack sweet or even re-enacting a scene from a film, or even just answering lots of unusual, quirky questions about landmarks and London people which were really difficult to crack on wiki or Google! The big difference is the way in which technology is used to give the treasure hunt an added dimension.

If we had wanted we could have scuppered the other teams’ achievements’. We could have used a range of time limited tools that prevented them from using their app/iPad.

It is possible to see where the other team is and their points on your map, so you could, if you wanted use these strategically…

Instead we focused on storming through various other photos, and puzzles to win even more points before arriving back at the London Eye.

Returning to the London Eye on time we had an amazing, white knuckle ride with Thames Rockets on a high speed RIB – again stopping for photos and more questions to win more points – before going back to the Slug and Lettuce for lunch, drinks and medals.

We were, says Julia with great pride the winners with over 600 points!

Julia Tybura (second from left) with her winning team mates

Julia Tybura (second from left) with her winning team mates

Julia tells me that the experience was exciting and that she thinks that it would be really effective for team building, brand or product training and leadership development.

You don’t need to be a technology expert or even familiar with apps to benefit from the approach.

It is says Julia an experience/app that could be used as a standalone experience or as part of an awayday/conference/training or brand development programme.

The ClueGo app was really easy to use and because of its GPS and use of ‘hotspots’ there was an element of surprise, so teams were kept on their toes if they wanted to win or not be ‘attacked’ by the red ghosts or zombies (which would lose you lots of points).

Always with a eye on costs, Julia described it as cost effective too – with an average price point of £45 per person (depending on numbers, location, timings and be-spoking) – so organisations large and small could benefit from some ‘serious fun’ with ClueGo.

Julia Tybura is managing director of Zenon Consulting

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The cunning approach to healthy eating

Picture the scene: one of the trainers is leaving the gym to move down south, and we are all in a local bar having one or two farewell drinks. As you would expect the conversation features a lot of reminiscing about events that will enter gym folklore, and then there are the conversations about how much or how little progress some of us are making in our pursuit of our ideal level of fitness.

There is a general consensus, as we order another round, that working out in the gym and no end of fitness classes will have very limited effect unless we all get the activities in the kitchen right as well.

Diet plays a huge part in achieving a fitness target. It is not only computers that produce garbage if you feed garbage in!

But, when there are so many temptations and so much of socialising, as we are demonstrating, revolves around the consumption of the less healthy options of food and drink it is the diet part of getting fit that is the most difficult part.

Then we also have to consider why does so much of the healthy stuff that we are told that we should be eating more of taste so, well strange?

Why should I have to start eating things that I do not like? Don’t tell me it’s an acquired taste, why can’t I reach my goal by eating food that I enjoy?

Meredith David and Kelly Haws think that they may have found the answer; in Saying “No” to Cake or “Yes” to Kale: Approach and Avoidance Strategies in Pursuit of Health Goals  which was published in Psychology and Marketing Journal.

The two American psychologists identified that people who are trying to adopt a healthy eating regime focus on two different types of activity

  1. Eating healthy foods like kale (referred to as “approach”), and
  2. Not eating unhealthy foods like cake (referred to as “avoidance”).

The level of change in behaviour that this two-pronged approach requires is above and beyond what many people are capable of achieving and maintaining. Most people just do not have enough self-control

If you are a person with low self-control when you try to change your diet your will tend to focus on what you cannot eat. Someone with higher levels of self-control will focus on the food they can eat.

Meredith David and Kelly Haws conducted two studies with hundreds of undergrad students who were asked to imagine that they were trying to live more healthily and/or lose weight.

Christian Jarrett of the BPS Research Digest described the studies.

In the first study which had three parts

  1. The students completed a questionnaire which identified how much self-control they have in everyday life.
  2. Some of the students were asked to list foods they should eat more of to make their diet healthier,
  3. Other students were asked to list foods they should eat less often.

The results showed that

The students conducted their allocated task in different ways, with the level of self-control being the factor which determined the approach the students took.

Students with high levels of self-control tended to like the foods on their lists more than those with low levels of self-control.

Likewise, the high self-control students were less likely to like the foods that they should avoid to achieve a healthier diet than their low self-control colleagues.

High self-control students also described more healthy foods as likeable that the low self-control students.

The second study involved a repeat of the first study with the added dimension that the students were asked to select the snacks that they would like to receive as a reward for their participation. The selection that they were offered included 16 healthy and unhealthy items.

Students that had provided positive ratings for healthy foods selected the healthier snacks.

The students who said that they liked the less healthy food items in the list exercise selected the less healthy snacks.

That may seem obvious, but David and Haws suggest that it demonstrates that if you want to adopt a healthier diet you should not focus on the things that you like that you have to give up, but on the things that you enjoy that are also better for you and which you should be eating more of.

This is an approach that should work for everyone but they concluded that it is an approach that people with more self-control find easier to adopt.

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