I’m HR Director of a small company which produces fireworks. We have just sacked our Director of Sales, Colin, for performance reasons. Unfortunately, I was away from the office when the actual decision was taken, and therefore the statutory procedures were not followed and Colin was simply walked off the premises. Needless to say, Colin has commenced proceedings for automatic unfair dismissal, but we are currently in without prejudice negotiations with the hope of agreeing a settlement.
A couple of days ago, I found out from friends and senior members of the company that Colin attended an industry networking event. He was overheard making derogatory comments about the company to people at the event, saying that our organisation was a “damp squib” now that he was no longer with us and that certain of our directors (who he named) were “old fashioned”, “clueless” and “needed fireworks stuck in certain places…”!
I want to try to stop Colin continuing to bad mouth the company and our executives, but at the same time want to prevent the company from having to defend a claim that I know we will lose. A tribunal case could do a lot of damage to our reputation, but then again, so could Colin… What should I do?
Petrified about Publicity
I can well understand your concerns. The last thing any company needs is an unhappy former employee doing the rounds and criticising your staff and the way the business is run, and no employer likes ending up in the tribunal.
You say that you are in the process of agreeing a financial package for Colin to withdraw his proceedings against you, and this sounds like the quickest, and most satisfactory solution. As a matter of tactics, you may wish to threaten to withdraw from without prejudice negotiations unless Colin desists from making such damaging comments. It is a very risky strategy for Colin to deploy, and once he is aware that the opportunity for a cash settlement is in jeopardy, he may take a more sensible approach. If he does want his day in court, then you may want to consider increasing the settlement offer to reflect a premium – as few employees will forgo a higher cash award simply for a point of principle.
Once agreement is reached, you will invariably need the deal documented in either a COT3 or a compromise agreement. This presents an excellent opportunity for you to also agree with Colin that he agrees to desist from making any further disparaging remarks about the company. The prospect of being compensated may be the perfect carrot to make Colin accept this contractual “gag”, although if he is alive to your concerns and sees the value to the company in having such a clause, it may well cause him to seek a higher compensation sum.
Non disparagement clauses
The non disparagement clause should clearly state that Colin shall not make or allow to be made, directly or indirectly, any statement which is derogatory or disparaging to the company. For clarity it should specifically state that this will cover oral assertions and published comments, whether formally or informally made. To have full effect the clause should be drafted to cover not only the company but also its officers, employees and agents. You will also have to take the decision whether you want to direct that Colin retracts any comments that he has already made. This may have the effect of further highlighting his prior comments and also Colin may be unwilling to be bound to such a strict condition. Colin may also try to water down his commitment by stating he will use “reasonable endeavours” not to make such comments. This should be approached with caution as Colin should not be allowed to seriously water down his obligations to the company – either he agrees to keep quiet, or he does not.
As a condition of his agreement Colin may request that the obligation is mutual and that the company agrees to abide by the same condition. Whilst this is fair enough in principle, it is easy for Colin to give such a commitment (as he is just one person) but it would be virtually impossible for you to police all your members of staff to ensure that no such comments are made by them about Colin. You should be very careful about agreeing to use “best endeavours” or “reasonable endeavours” to ensure that no employee or officer of the company makes such remarks. Although on the face of it this qualifies the company’s obligation, what amounts to “best” or “reasonable” endeavours could lead to a dispute. Instead, the company should consider limiting any reciprocal obligation to the Board of the company (which can be policed relatively easily), or confirmation that the company will not condone any such statements made by any of its employees or directors.
But what if he breaches his agreement?
Any breach by Colin of the non-derogatory statements clause will be a breach of contract on his part. The company would have the right to commence proceedings against him for any losses arising out of such breach. Whilst such losses may be difficult to quantify, the threat of proceedings may be enough to make Colin shut up!