Employment contracts are fickle things – so it’s essential that HR leaders are careful when constructing them
Employment contracts are fickle things – so it’s essential that HR leaders are careful when constructing them. One of the main areas of contention lies with restrictive covenants, which have the potential to ruin a business.
Imagine having invested all that time in recruitment, in training and developing a key employee, only for them to hop ship to a competitor. What do you do?
Job hopping is a serious concern for employers, especially considering the skills shortage currently rampant in Canada. According to a report from Indeed, 73% of Canadian employers have chosen not to interview someone who’s had a list of short-term jobs at previous companies. Moreover, 27% of Canadian employers say that they have a negative view of people with a history of short-tenure.
And, despite the negative connation on short-term tenures, employees would be foolish to pass up a golden opportunity – even if it’s being offered by a competitor.
This in itself poses a problem for HR. You don’t want to lock workers into iron-clad contracts, but you can’t risk letting your top talent go to a rival.
This is where complex restrictive clauses come in.
Often cited as ‘non-compete clauses’, these phrases are built into employment contracts to mitigate any potential harm coming to organizations.
There are three general components of a clause. The first deals with temporal scope – essentially, how long the clause will extend to after the employee has left. The second is reach – does it pertain only to Canada or to global competitors too?
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Thirdly, you have to know exactly what you’re prohibiting the employee from doing. Will you be stopping them becoming involved in one single area – such as sales? If so, you need to define it explicitly in the document.
And whilst this may sound simple in theory, drafting them can be a legal minefield.
Don’t miss out HRD Canada’s upcoming webinar with Laura Williams, founder of Williams HR Law, where you can learn all the intricacies and pitfalls of restrictive covenants.