Page 8 - CIMA SCS Workbook February 2019 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

for longer. I would suggest that their contracts be reviewed immediately to identify the notice
period(s) contained therein.

However, this also has the disadvantage of allowing people who are soon to be competitors
longer to learn more about Vita’s research projects, and also disrupt the remaining staff. They
might even start talking to other staff about joining Funfitt at some future point.

The purpose of a notice period clause being inserted into the contract of employment is to give
the employer some protection against staff leaving immediately on resignation. The employer
does not have to exercise that right. Indeed, in many instances senior staff are put on immediate
‘gardening leave’ in order that disruption to the business is minimised.

I would suggest that this is the better option in this instance, and that Sheila and her colleagues
be asked to clear their desks immediately.

It is also advised that Sheila’s contract of employment be reviewed to see if it contains a non-
compete clause. Such a clause, if worded appropriately, could be used by Vita to prevent an ex-
employee from joining a competitor for a minimum stated period of time. This would mean that
the 4 ex-employees would have to be paid by Vita during their notice period, but could not join
Funfitt until the non-compete period has expired. However, such clauses can be difficult to
enforce in law and, if such a clause exists, legal advice should be sought as to how much reliance
can be placed on it.

Actions to minimise the risk of future similar incidents

Contracts of employment

Legal clauses (as mentioned above) can be made more onerous regarding rights and entitlements
when resigning. Extended notice periods, clauses restricting the ability to compete, and the
immediate forfeit of any equity stake in the company should be standard practice.

Feedback and appraisal

The process of appraising senior members of staff, and follow up actions taken, needs to be
investigated. It would appear that Sheila has always had ambitions to progress to Board level, but
perhaps the extent of her ambition has not been recognised by Vita.

An appraisal process requires honest communication between the appraiser and appraisee,
including comments not just on historic performance but also on the individual’s future
aspirations. A key part of retaining talent is to ensure that employees’ objectives are being met as
much as possible.

Ethics policy

On joining Vita, or becoming a senior member of staff, employees could be asked to read and sign
an ethics code. This would include the issue of sharing information with competitors that is
confidential (for example, any new technological developments in fitness tracker software). It is
inevitable that, should staff leave to join a competitor, they will take their skills and knowledge

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