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Words from a Spa & Beauty owner

Written by Spa Beauty NZ on August 9th, 2018.      0 comments

I feel My conscience is clear, business is business, is it ok to employ a staff member from another business within your community? Or is the question more, when is it ok?

So, we all have staff contracts, which all have trade restraints, designed to protect our businesses from staff being poached (head hunted), to staff leaving and moving in up the road to start their own business or to work for a competitor.

As employers are these contracts protecting us, do they stop a staff member from opening down the road? and really, I ask the question can these contracts actually prevent an x employee from working within so many km of our business?

I am feeling that no, we aren’t really protected, the law states we cannot prevent someone from earning an income. For those of us in small communities if we choose to go down the legal path and take action on a staff member breaking a trade restraint we take the risk of bad press….., bad word of mouth, which we all know can damage our business’s reputation.
What is a Restraint of trade?
An employer and employee may agree to include a restraint of trade clause in their employment agreement. These clauses are designed to protect a business’ commercially sensitive information by restricting the employee‘s business activities when they finish working for that employer. They are usually limited to a specific geographical area and only last for a specific period of time after the end of the employee’s work.

The two main types of restraint of trade clause are:
  • non-competition - where a former employee is prevented from working in a similar field to their former employer’s business
  • non-solicitation - where a former employee is allowed to take another job in the same or similar industry, but is restricted from contacting their former employer’s clients about their new business.
If you intend to operate or join a business in competition with a former employer, it is strongly recommended that you get your own independent legal advice as to whether a restraint of trade clause might apply to you.

On top of that employees have this axe that they can drop on us if we choose to fight the trade restraint, I’m sure you’ve all heard of it, the PG (personal grievance), an opportunity for an employee to make a formal complaint about anything that they feel was unfairly… on them during their time of employment with you…

Now, may I add, there is a genuine reason for this clause for employees, and I wish to not take this away, as we know there are unsatisfactory employment conditions out there, and this will protect employees.

BUT, when it is used in a threatening way against an employer, to get the trade restraint dropped, when its used for the wrong reasons, and its an employee’s word against an employer that has a clean record, outstanding feedback from existing staff, and it’s that one employee that we know twists the truth! Who’s there to help us the employer.
Or is this just what we must take on the chin because we choose to be a business owner?
What is a personal grievance?
Employment Relations Act 2000, Part 9
A “personal grievance” is a legal claim you can bring against your employer if you think they’ve dealt with you illegally or unfairly. You can use the personal grievance process if your employer has dismissed you unfairly or done something else you think is unjustified, such as suspending you, giving you a written warning, or demoting you. A personal grievance is also available on certain other grounds such as discrimination and sexual harassment. (See below, “On what grounds can I bring a personal grievance?”.)
Employment Relations Act 2000, ss 102, 103
There’s a particular process you must follow when you bring a personal grievance. You must first raise the issue with your employer within 90 days. Then, if you’re not satisfied with their response, a free mediation service is available. If mediation doesn’t work, you can take your grievance to the Employment Relations Authority. (See “Raising a personal grievance: The process” in this section.) Employment Relations Act 2000, s 103(1)

So lets look at why staff may leave us for a competitor, because they think the grass is greener on the other side..
  • NOT HAPPY IN CURRENT JOB, management conflict, or other staff conflict.
Do we want staff working for us that are not happy? the answer is NO, but we should be on the ball and know why they are not happy. Communication is the key to knowledge of our staff’s happiness.

From the above possible reasons, what can we change? what can make them stay?

If they have genuine reasons to leave, should we give them our blessing, create a pain free exit plan, learn from this and move forward?

What’s the biggest risk to our business when we loose a staff member to a competitor?
  • Clients follow
  • Clients take the opportunity to try another business, but don’t necessarily follow the exiting therapist
What can we do about clients following?

How do we protect our business, our clients?

Do we walk our staff member, put them on garden leave, so they can’t talk to the clients, but if we do this, we are missing out on income for that duration, and yet still having to pay their wage?

We can’t make the clients stay, it is of course their choice, but we can try and influence them to stay with clear proactive communication:
  • a timely communicated hand over process with another staff member (introducing them to a new staff member)
  • an incentive to stay and try…..
When we find ourselves in this situation reality will prove is this client the business’s client, or are they the therapist’s client?

What could we have done differently to keep this client loyal to the business, not the therapist?

To be continued next edition.
Topics: Business




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