How to Ensure an Employee’s Loyalty After Dismissal

Anna Bayda
Head of Labor Law Practice Group
Beiten Burkhardt

All companies face the issue of dismissal of employees from time to time, and there is always a high risk that a former employee may disclose confidential information that could cause severe damage to the company in the hands of competitors. Professionals say that, judging by their experience, losing just one-quarter of the information that is classified as a commercial secret of a company, results in the bankruptcy a few months later of 50 percent of the companies that had allowed such information to be leaked.

Persuading an employee to stay faithful or loyal to the interests of the company after dismissal is a difficult and important task, because no protection measures, even the most expensive ones, can prevent disclosure of confidential information by one’s own employees.

Solving the issue of an employee’s loyalty entails a set of actions to observe legal norms and provision of organizational and psychological support by the administration during the dismissal of employees.

Through legal means, the company procures the legal basis for the protection of its confidential information by making an employee responsible for nondisclosure of the confidential information. However, means of organizational and psychological support to the employee by the company contribute to the employee’s loyalty that additionally ensures that information is kept confidential by him/her.

Timely execution of so-called restrictive agreements with an employee is of significant importance. In this regard, the following agreements (clauses) are known in global practice: Nondisclosure Agreements, Nonsolicitation Agreements, Noncompetition Agreements and Nondisparagement Agreements.

The practice of executing employment agreements with additional conditions (restrictive agreements) in Russia is still at its embryonic stage. For now, only one such type of document can be commonly identified — agreements on nondisclosure of confidential information (commercial secrets). Such agreements may be executed either as a separate document or as one of the conditions of the employment agreement. Pursuant to them, should the employee violate the company’s confidentiality, he/she will be held legally liable.

It is very important to remember that the laws of the Russian Federation provide for execution of nondisclosure agreements for a period after termination of labor relations. Companies should keep this in mind and apply it in order to protect their interests.

Besides the legal aspect of parting with an employee, the company should think about making a positive impression on the employee’s memory.

For this, in other countries and, lately, in Russia, programs of measures for conflict-free dismissal of employees that has been named “outplacement” have become more and more popular. These programs were first used abroad right after World War II, where they became the focus of interest of industrial corporations due to the need to overcome the imminent crisis of employment and the need to reorganize internal structure.

Outplacement is support and help on the part of the company to an employee, using recruitment agencies to find him/her work. Secondly, it is a process of educating and adapting the person who has lost his/her job or who is looking for a job, so that he/she is able to be employed again in a relatively short period of time. A company may also assist in occupational retraining of the employee whose dismissal is envisaged, express its appreciation to this employee for his/her hard work, and provide him/her with letters of recommendation.

Besides this, it has become more and more popular of late to use a method where dismissed employees are offered additional compensatory and severance payments, which are significantly higher than the payments that are officially established for dismissal, as this also leaves a favorable impression from working for such a company.

Therefore, in each case of dismissal there should be a dismissal pattern developed, preparatory work with employees performed, and implications of such dismissals calculated and minimized. All this should be done so that former employees stay loyal to the interests of the former employer, or at least neutral to them. As practice shows, the company’s efforts to this end are repaid a hundredfold.