Blog: Scam retirement lessons for business

Why a rugby ace’s mysterious retirement offers valuable lessons for holding on to business prize assets, writes Graham Millar.Johan Goosen announced his immediate retirement from rugby (aged just 24) and is now listed as a commercial director in his native South Africa.Rumour has it he wanted a move to an English club but, having extended his contract, this was not a viable option for suitors across the Channel. By “retiring”, Goosen hoped to effectively rip up his contract to switch to rainier climes.

The decision of his club, Racing 92, to initiate legal proceedings against the International may seem to be closing the stable door after the Bok bolted, but how do you protect your business from the departure of prized employees?

It’s stating the obvious, but make your workplace a fulfilling environment. Ensure your employees know the company culture and, importantly, make sure they feel valued.

Financial reward is less of a motivation than one would think. Paying an employee more is not the answer – eventually your wage rise will not meet expectations.

So, taking this into account, what contractual safeguards can you make against high profile staff losses?

Firstly, employee ownership is a good way of inspiring loyalty and hard work – after all it’s their business too.

Conversely, “bad leavers” leave the firm in the lurch - and can lose any share option that they have within the company.

Similarly, paying bonuses can attract the brightest around – and retain them if bonuses must be paid back if they leave prematurely.

Paying for your employees training is a win-win. You can improve their input to your business and they get the opportunity to leave a more educated person. A repayment of training costs clause, on the basis that you have not felt its value strengthens the employer’s side.

Garden leave clauses are a must. Any employee not physically accessing your systems will remain bound by the terms of their contract for its duration and allows businesses to ensure accrued holiday are used, rather than paying in lieu.

Long notice periods can signify security for employees and employers, allowing time for reconsideration. It makes it less simple for staff to switch to impatient rivals and strengthens negotiating position.

All these actions are based on what it is you need to protect and for how long you need that protection. As such a well drafted restrictive covenant remains a valuable tool.

These are enforceable and, with thoroughly drafted terms, make it difficult for departing employees to jump quickly to competitors, allowing you time to shore the defenses.

With a well drafted contract you are doing all you can contractually to protect your business and keep hold of key employees.

After that, it’s up to you to create a nice place to work.

Don’t drop the ball and lose a star unnecessarily.

Blog: Scam retirement lessons for business

  • Graham Millar is a partner at Gilson Gray.
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