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How to stop my employees stealing clients?

How to stop my employees stealing clients?

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Hello

I am about to take on my first part time PAYE employee (i.e. not a sole trader or ltd company consultant).

And I am just wondering about how to best structure their employment contract in order to prevent the employee from stealing my clients in the future?

Am I allowed to put this in a contract for them to sign?

I believe all my previous employment contracts had clauses about working in the same area for 24 months or not contacting clients for 6 months after leavng. Is there any clause more robust than this?

It is unlikely to happen because my employee can only work part time but better to be safe than sorry.

Replies (20)

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By johngroganjga
28th Nov 2018 07:55

This is a question for an employment lawyer.

Thanks (3)
Lisa Thomas
By Insolvency Practitioner
28th Nov 2018 09:22

Possibly not relevant to this forum so you could try here:

https://www.ukbusinessforums.co.uk/forums/legal.57/

Thanks (1)
By ireallyshouldknowthisbut
28th Nov 2018 09:33

Staff cant 'steal' clients, clients decide who acts for them.

The best way is to ensure you maintain the client relationship, such that the client knows you, and not your no.2

If you allow your clients to form a deep relationship with your assistants, then you are vulnerable. If they have little or no relationship, then you are not.

Contracts are helpful, but can be broken.

In mine it says something along the lines of if you introduce a client to the firm, then you are entitled to invite them to come with you if you move firm, for anyone who you don't introduce, you are not entitled to approach. Its rare an assistant introduces anyone!

Thanks (4)
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By Maslins
28th Nov 2018 09:31

Yeah you can have something in a contract, but as I understand it in the real world it's not realistically enforcible. So it's there mainly as a deterrent to scare them.

From a more practical perspective, treat them well, and 99% of people wouldn't consider trying to screw you over in this way.

Also in a more cynical way, perhaps keep most of the more "running a practice" type tasks as things you do. Occasionally grumbling loudly about how massively onerous they are to put the employee off...

Thanks (2)
Replying to Maslins:
ALISK
By atleastisoundknowledgable...
28th Nov 2018 12:18

Moaning about costs helps, especially the ten or so different software costs you have .. lead gen, CRM, engagement, tax, accounts, bkpg, PM, CoSec, DMS ...

Then there’s insurance, office costs, IT, practicing certificates ...

I’m starting to turn myself off it now!

Thanks (5)
Replying to atleastisoundknowledgable...:
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By Maslins
28th Nov 2018 12:31

Yeah you got it!

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Replying to Maslins:
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By GR
28th Nov 2018 21:21

I have done some reading and you appear to be right, i.e. it would be expensive to realistically try to enforce a restrictive covenant. And even if you spend the money on solicitors there is no guarantee that you will get the result you want.

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By Tim Vane
28th Nov 2018 09:35

Don't waste your time trying. It doesn't work.

Thanks (1)
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By kestrepo
28th Nov 2018 10:09

I understand and recognise that employees who are leaving could poach clients after their employment has ended but in my experience it isn't as common as you might expect - not everyone is as entrepreneurial as you!!

You could ask your new employee to sign a restrictive covenant. This is only enforceable if the contract is set up to be reasonably necessary to protect you "legitimate business interests”. If it is set up correctly (see a solicitor) it may give you the protection you require - there are a lot of legal gets out to this and it is much more complicated than a simple post on a forum.

As a compromise why not look at getting a generic staff handbook (you can pick them up online and add your company name fro not a great deal of money) and also add a couple of paragraphs about not poaching clients - might already be included. This would also set the grounds for sick pay, holiday pay, disciplinary procedures etc if they are required or queried in the future.

Thanks (4)
Replying to kestrepo:
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By GR
28th Nov 2018 21:23

Thanks. I have done some reading and it appears a restrictive covenant of more than 6 - 12 months would be difficult and expensive to enforce. After 6 - 12 months it appears you lose the "legitimate business interests" argument.

Thanks (0)
Caroline
By accountantccole
28th Nov 2018 10:38

I used to have restrictive covenants in my contracts. With social media it is really easy to find people when they change jobs so there are no guarantees that clients wouldn't hunt down the employee so not sure how useful they really are

Thanks (1)
Teignmouth
By Paul Scholes
28th Nov 2018 12:35

There's loads of help online about employment, eg .GOV and ACAS with basic employment written terms templates, just Google "Employing people".

There's a lot more to consider than just the basic terms of employment but, as and when you've got to grips with it all, Simply Docs Employment templates and guides are excellent eg: https://simply-docs.co.uk/Employment_Contracts/Part_Time_Employment_Agre...

I relied on loads of their documents for all the years I employed people and each of their sections (eg Employment) are available for only £35 + VAT pa.

Thanks (2)
Hallerud at Easter
By DJKL
28th Nov 2018 13:01

Restrictive covenants re employment contracts can be tricky- I still remember from university:

BLUEBELL APPAREL LTD V DICKINSON: SCS 14 OCT 1977

re extent/scope of restraint (stuck with me as it was re Wrangler jeans, I wore them as a student)

There are likely far more recent cases etc so if you want a legally effective solution DIY is probably not a good idea.

On the other hand even with a contract that might well bite in a court, the reality is if push comes to shove in the future the outcome will often be less than satisfactory, even if you win your day in court.

I would personally devote more effort to keeping the "at risk" clients close to me and less on the legal contract, but that is because over the years I have found that litigation is generally only good for the lawyers. (Beyond simple debt recovery)

Contractual disputes can be tricky things- a good ruck over say a building contract can keep the teams at work, and the fees flowing, for years.

Thanks (1)
Della Hudson FCA
By Della Hudson
28th Nov 2018 13:51

It’s a risk but without that employee you can’t service many more clients anyway.
1. Get a proper contract drawn up as a deterrent
2. Look after your employees well so they don’t leave
3. Look after your clients well. Even though my team had most of the regular dealings with clients as we grew, I still had contact with all but the smallest.

Thanks (3)
Replying to HudsonCo:
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By Ken Howard
28th Nov 2018 15:45

HudsonCo wrote:
2. Look after your employees well so they don’t leave

Nice idea but in reality, employees will leave however well you treat them. Not everyone wants to be an employee or work in the same place all their lives. Some will want to move to other firms for a variety of reasons, i.e. better terms, different types of work, partnership prospects, relocation etc. Some will want to set up their own business. I was very well looked after by a small practice, to the extent I was the highest paid employee, was allowed unrestricted flexi-time, had my own portfolio of clients with total autonomy. I still left despite the partners offering me basically whatever I wanted when I handed my notice in - they couldn't have treated me any better or offered me any more - I'd have still left as I was relocating and didn't want to commute daily to the office. A fair number of my clients came with me - not because I "poached" them - they sought me out after I left. I made great pains not to tell my clients what I was doing nor where I was going. But clients are real people who have freedom to make their own decisions. Thankfully, my old bosses were realistic and didn't threaten or make a fuss when they kept getting clearance letters - they didn't have any grounds anyway as I stuck to the contract of employment which prevented me from soliciting their clients (I never initiated any contact) and I relocated outside the geographical area they specified. To the OP, unfortunately, employees taking clients/customers with them is a fact of life and especially these days, the internet makes it easy for clients to find out where employees have moved to via google searches, linked in etc.

Thanks (1)
Replying to HudsonCo:
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By GR
28th Nov 2018 21:26

Thanks. Does your new book go into restrictive covenants? And agent service account for MTD?

Thanks (1)
Red Leader
By Red Leader
28th Nov 2018 16:14

Threats of unspecified violence.

Thanks (0)
Replying to Red Leader:
Hallerud at Easter
By DJKL
28th Nov 2018 16:29

Does specified violence not work?

Thanks (3)
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By CW2012
03rd Dec 2018 16:23

Does anybody offer their staff inducements to encourage them to bring in new clients. What sort of payment would be suggested, we have a member of staff that creates about 2 + new clients a month, some are via existing clients who are happy with this individual and some are totally new to the firm.

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By pauljohnston
04th Dec 2018 11:36

If you are going to incentive staff for new clients just make sure you dont insult the member of staff. Ie £25.

I would suggest that 20% of the first fee when paid is a starting point. Pay it as a bonus (ie less tax and NIC)

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