After the recent local elections, there are calls within the Labour party for Kier Starmer to resign (or risk being ousted!) as leader. Changes at the very top of any organisation can lead to unrest internally and also to external issues should customers or clients feel unsettled by the change or the manner in which it has come about. The exit of a senior player in any business needs to be carefully managed to ensure stability, and to avoid unnecessary conflict and, worst-case scenario, litigation!
First of all, it is important to identify why a senior manager is exiting. If it is their choice to leave, while there may not be any risk of a subsequent unfair dismissal claim, it is not necessarily risk free. It is important to find out why the individual is leaving.
Retirements
If they are retiring, while waving them off with a party and a present may seem like the most pressing concern, be sure to also agree a handover plan with them to ensure a smooth transition to their replacement. In most instances, an employee’s contractual notice period should provide enough time to do this, but if it seems likely longer will be needed or there may be some ongoing runoff issues, discuss this ahead of time and try to reach an agreement with the departing employee about what assistance they are prepared to provide.
Resignations
If the employee is leaving for another job, the employer should consider if there is a risk should they remain in the business during their notice period. For example, are they privy to sensitive information which, in a competitor’s hands, would be detrimental to the business? While hopefully senior employees’ contracts would have sufficient protection in the form of confidentiality clauses and restrictive covenants, it goes without saying that avoiding the stress and often significant cost of having to enforce such terms is always preferable. One option may be to place the employee on garden leave so that they remain in the businesses employ but no longer have any access to records or other sensitive information. While this may seem like dead money as the individual will of course have to be paid during any period spent on garden leave, the overall benefit may well outweigh the initial outlay.
Dismissals
What if it is the business’ decision to part ways? As with all dismissals, it will need to be fair, and a fair process will need to be followed. However, with more senior individuals, it is often unpalatable to both parties to carry out lengthy disciplinary or performance management processes. While each situation must be assessed on its own merits and any risk factors taken into account, it is worth considering whether an agreed exit would suit both parties better. Ideally, this would be broached on a without prejudice basis, with any open negotiations/processes running in parallel. What amounts to a “good deal” in terms of an exit agreement depends very much on the parties’ aims.
If an employee is particularly difficult or causing significant problems in the business, it may be that the company is prepared to stretch a bit further in terms of a monetary payment, but don’t underestimate the importance of the “easy wins”. Many employees will be highly motivated to avoid having a dismissal on their record, particularly if they are facing disciplinary allegations or being managed for poor performance. Offering an agreed reference is also something which is free to the employer but may be of great value to the employee. It is also possible to negotiate on contractual terms such as restrictive covenants. Releasing an employee from their obligations under restrictive covenants or reducing the length of time for which they will apply makes it easier for the employee to secure alternative employment making an exit package more attractive.
Summary
While there is a lot to think about when a senior employee leaves or is asked to leave their employment, if the process is managed correctly it will greatly reduce the risk to the business of animosity, litigation and reputational damage. While parting really can be such sweet sorrow, when it comes to the end of a working relationship, it’s in everyone’s interest to go heavy on the sweet and as light as possible on the sorrow!
