How Can We Stop Employees from Breaking Confidentiality Agreements in Manufacturing?

Confidentiality Agreement Breach in the Manufacturing Industry

My name is Sujeet S Rajawat, and I am working in the manufacturing industry in Lagos, Nigeria. We are facing an issue where, even after signing a confidentiality agreement stating that employees will not join any competitor for a certain period, employees join a competitor immediately. They do not serve proper notice periods at times and resign from the job immediately. It is becoming a severe HR issue, and I need your expert advice on how to prevent this situation.

Proposed Solution: Publishing a Disclaimer

We have one idea, and I request you all to evaluate it as well. We propose that on the day an employee leaves the job, we will publish a disclaimer with the photo of the employee, stating that the ex-employee has left our organization and has no relationship with us anymore. This step will help us ensure that the employee does not use our reference when joining our competitors.

Other effective inputs are also welcome. Please advise.

Regards,
Sujeet S Rajawat

I don't know much about Nigerian Law, but the Common Law regarding it is that you cannot stop your employees from joining a competitor. This is yet another clause that you generally find in every letter of appointment but holds no legal sanctity. It is the constitutional right of a person to work for anybody whom they wish to work with.

Although serving the notice period is certainly an issue, a possible remedy may be to keep 7 to 10 days' salary on hold at all times, but only after mentioning this clause in the appointment letter:

Notice Period Clause

Please note that your salary for ____ days shall remain on hold with the management at all times, and the same shall be remitted to you upon separation from our employment as part of your Full and Final Settlement, subject to your serving the agreed notice period. If you leave the service without serving the agreed notice period, this amount shall be forfeited as a penalty without prejudice to the management's right to take any legal action to recover the notice pay.

I hope this will not only help reduce your attrition rate significantly but also minimize your absconding cases.

Please revert in case of any doubt. Don't attempt something that is not enforceable under the law.

Regards.

Understanding Silent Attrition and How to Address It

Have you ever thought about why your employees are leaving the organization within a stipulated time span? It's a serious issue, isn't it?

Signing any confidentiality agreement serves no good in preventing employees from joining competitors. They sometimes do not even serve proper notice periods and resign from the job immediately. Could you explain what steps were initially taken to address why these people leave immediately or do not provide a valid reason for not serving a proper notice?

According to the facts you have provided, this is called Silent Attrition. It occurs because the company is unaware of the employees' happiness, and the employer has no opportunity to understand the reason for their departure. These employees leave uninformed or without explanation. In such cases, there should be a clause defining that the notice period should be in the interest of mutual benefit to both the employee and employer (as this type of clause is commonly accepted by both parties). Furthermore, if one blatantly violates this clause, the employee could be considered non-compliant, leading to no relieving or acceptance of resignation. This approach can help in managing the attrition rate within your company.

Regards

Dear Sujeet,

An ex-colleague of mine works as an HR Head at an IT Firm in Kenya. He had shared the same challenge. He implemented a program for employee engagement where he made sure to keep the employees very close. He is extremely proficient in legal and expat management. During the events, he would informally speak to everyone, only to listen to them and discuss the procedures. Letting the employees know about the extent to which they can go often reduces attrition without a very strong reason.

A declaration in a newspaper remains self-explanatory when the reason for leaving includes any fraudulent activity or any other similarly dire situation. You would remain the best judge of your situation. Wish you all the best!

Hi Sujeet, I head HR for a multinational and am based in Port Harcourt, Nigeria. While I worked in India in one of the top consumer companies, the COO quit and joined a startup as Managing Director, which was a competition to this large company. The startup was funded by venture capitalists. He took along with him 11 good performers. My company, a large brand belonging to one of the most respected groups in the world, filed a case against the ex-COO and the 11 employees for having breached the terms by joining the competition.

The ex-COO immediately resigned from the position of MD in the new company, and instead, his wife was appointed as MD. All knew that it was a proxy since she was a dentist and he was from IIM C. But the 11 executives and managers continued. The judgment in every court up to the Supreme Court was that only the COO could be restrained from joining the competition for a period of two years since he was privy to strategic information. But even that is subject to appropriate compensation being given to him for such restraint. The other 11 executives cannot be restrained from working in the competition since it violates the fundamental rights, and they are not privy to business strategy.

Since I have been working in Nigeria for the past 5 years, the Nigerian laws are similar to Indian laws, both being Commonwealth countries, and both laws were drawn by the British and have not changed since ages. Even the fundamental rights of both Nigeria and India are the same.

In terms of publishing the picture, the process you need to follow in Nigeria is to first file an FIR with the police for the employee having committed a crime. The police will register the complaint. You have to attach the copy of the FIR complaint acknowledged by the police and send it to the newspaper to publish the picture. And please remember, changing jobs is not a crime. Even you changed jobs. Being a support function, we have the flexibility to change the type of industry, which most line people don't have.

Instead, as suggested by all others here, please try and conduct an employee engagement survey and initiate some OD activities. You will see results in the medium term. If you see it in the short term, it's good. But remember, your management needs to win the trust of employees as a good employer. The kind of activities you have proposed will make others also run away, just like what happened in the leading Telecom company of Nigeria very recently, when successive CEOs from South Africa and India and all Indian executives ran away because the management planted canard regarding the Indian CEO who quit. Finally, when 75% of the expats quit, the management realized the mistake and got back the old Indian CEO about whom they spread canard at double the salary. This act was to give confidence to remaining expats that the management did not spread canard, but the rumors were false. And they also announced that all former expat employees are welcome back.

So, be cautious in what you plan and look long term.

All the best.

Thank you very much for your kind support and guidance. I sincerely appreciate the response I received from each of you as they are worth tons of thanks.

Guidance Request

I humbly request you to guide me in detail on how I can address this issue strategically. Also, the type of OD initiatives we can take in Nigeria—if you can shed some light on that, it would be greatly supportive.

Your kind advice and feedback on the same is highly appreciated.

Warm Regards

[QUOTE=sujeet_rajawat;2039492] Dear All, Thank you very much for your kind support and guidance. I sincerely appreciate the response I received from each of you as they are worth tons of thanks.

Request for Guidance on Strategic Issue Resolution

Dear Anonymous, I humbly request you to guide me in detail on how I can address this issue strategically. Also, the type of OD initiatives we can take in Nigeria, if you can shed some light on that, it will be great.

Dear Sujeet, Please call me on [Phone Number Removed For Privacy Reasons], and we could discuss.

Regards,

Appreciation and gratitude to our anonymous contributor. Such timely and relevant inputs are priceless. We are certain the phone call would be a great help to Sujeet. For the benefit of everyone else, how can we learn from this?

Looking forward to hearing from you.