Retention contracts vs restraints of trade

“Restraints of trade, in particular, should not be used as a tool to retain staff. It is worrying, therefore, that many companies' efforts at employee retention consist solely of making it more difficult for them to leave. This is a misguided approach to retaining skills,” she says.

Myth

Despite recent adjudications in favour of restraints of trade that dispel the myth that these contracts are not enforceable, Goodman-Bhyat says that employees who want to resign will do so in spite of having a restraint of trade.

“While restraints of trade are useful in protecting sensitive and unique proprietary information and intellectual property, solid retention contracts can negate or at least postpone the need to enforce these deterrents,” she says.

“Companies should thus take a more positive approach to keeping valuable employees. Ensuring compatibility of personal and company values, providing solid promotional prospects and career challenges, and offering competitive financial packages are excellent ways to retain top people. Another effective tool is the retention contract, which is being increasingly used to incentivise employees to stay in their positions for longer.”

Reality in today's market

Goodman-Bhyat does, however, emphasise that job-changing is a reality of today's employment market. Retention contracts may, at best, delay the inevitable. “In the current skills-short climate, we are seeing fierce competition for talented high-fliers, with companies often prepared to foot the bill to pay out retention contracts in order to secure the right people for their organisations” she says.