How to protect your SME when an employee leaves

It can be a tricky time when an employee leaves an organisation even in the most amicable situations. There can be a lot to arrange or rearrange to protect the business during the transition. The difference for an SME is principally that all these issues fall to the CEO, CFO, chief cook and bottle washer – in other words, you.

Following is a quick checklist of the steps you should take to protect your SME when an employee leaves.

1. Know your responsibilities under the Fair Work Act and unfair dismissal laws

Employers may not dismiss employees in harsh, unjust or unreasonable circumstances or for impermissible reasons, including age, race, and gender. Employees should be given reasons for dismissal and an opportunity to respond to those reasons.

Employers with fewer than 15 employees are covered by special dismissal rules, such as employees must have worked for the business for 12 months in order to be eligible to make a claim for unfair dismissal.

You should also ensure that you provide employees with required notice and any annual leave that they have accrued.

2. Make sure that you that you have a comprehensive written employment agreement with the employee

This contract should explicitly spell out the employee’s obligation to protect confidential information and intellectual property such as copyrights, designs, and patents the employee may have had a role in developing. It would be wise to include a non-competition clause in the contract as well. This should be formulated with and reviewed by legal counsel to ensure that it is enforceable and complies with the requirements of law.

3. Incentivise good employees to stay

Is there any employee you would hate to lose, without whose knowledge and talents the business would surely suffer? Do superstars have the chance to grow in the business or must they leave? Would it be appropriate, under the circumstances, to share an ownership interest in the business, even if that means a fundamental change in business structure?

4. Limit employees’ information access to only what is relevant to their job

It is simply a matter of good information hygiene to limit access to sensitive or confidential information. This protects the business and may limit its exposure to legal action by other employees, as well.

5. Assess your SME’s cyber vulnerabilities

Make sure that your data systems are adequately protected with firewalls. Ensure remote access to all employee- owned devices, so that proprietary data can be secured or removed as soon as possible on termination. Make sure that the ownership rights to social media accounts are clear. This is another issue best handled at onboarding.

6. Plan the exit interview

Every employee should have an exit interview, even if the parting of the ways is completely friendly. The employer should be prepared to calmly discuss and document the reasons. Always have a third person present to act as a witness. Prepare and present the employee with an exit letter that sets out obligations under the employment agreement and their general law obligations, which include:

  • A duty of good faith, including a duty not to solicit customers of the business.
  • A duty not to use or disclose confidential information obtained by virtue of the working relationship, in any way which benefits the ex-employee or a third party.

Particularly if the interview is likely to be acrimonious, some experts recommend arranging to have passwords and access codes changed during the course of the meeting. In angry or otherwise difficult situations, the employee should not be allowed to re-enter the work space, but should be escorted out with personal belongings shipped home separately.

Rolf Howard, Managing Partner, Owen Hodge Lawyers

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    October 21, 2018 at 17:40

    An employer is not always fully aware of the motivation behind an employees departure. The employee may harbour a grude that arose during their employment term and have merely been waiting for a sulable exit opportunity. Its for this reason I advise my clients (I am an IT contractor) to let me know when an employee is departing for any reason, especially if they are abut to be disssmissed. All too often in the SMB space an employee leaves and leaves a trail of destruction behind them, and the SMB sees the cost and stress of propsecuting the employee not worth it. If you have a good IT contractor and one you can trust, let them know so that they can help protect the business from Data deletion, changed passwords to systems only the the employee had access to, walking off with license keys to your software leaving you open to accusations of piracy…. and much more

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