This essay is basically about the Catastrophe Concepts contract. Catastrophe Concepts is an Australian manufacturer as well as a distributor of women’s fashion apparel. The sales manager of the company, Karen Stevens was hired by the company in the year 2001 and currently Karen works as a senior sales executive for Catastrophe Concepts. It has been eight years now that Karen is working for the company and is being paid $175,000 annually and is also provided with a company maintained car.
However, there is no specific written record regarding Karen’s recruitment except for a letter that was sent to Karen in which she was welcomed to the company and it also said that she would be paid $75,000 annually by the company. However, Catastrophe Concepts is now facing a serious downturn that has concerned the marketing manager of the company, Lilly Zheng to question whether Karen should be allowed to continue working for the company or not.
Karen has been working for Catastrophe Concepts since the last eight years with all sincerity and no issues of misconduct or decline in her performance can been seen as her performance has always been rated acceptable but she does not have any further chance of promotion or to further advance in her career. This is the reason why Lilly Zheng is concerned whether Karen should be allowed to continue working for the company or she should be terminated and due to this Lilly has a few questions in her mind and she wants the human resource manager, George Chapel to answer.
In this part of the paper I would answer some of the questions arising in the mind of Lilly Zheng from the viewpoint of George Chapel. The first question that Lilly has in her mind is related to Karen’s termination and she wants to know how Catastrophe Concepts can terminate Karen. For this, I would say that termination would not be the correct word to be used in this case and the reason behind this is that an employee can only be terminated from the company on the basis of misconduct or due to unsatisfactory performance but Karen is not charged of any of the two so she cannot be terminated from Catastrophe Concepts.
However, termination has a broader concept than this and it can be voluntary i. e. with the employee’s free will or it can be involuntary i. e. terminated by employer. Layoffs and dismissals are a part of involuntary termination. In this situation, Catastrophe Concepts can layoff Karen due to the downturn of the business or they can opt for a mutual agreement between Karen and the company. In order to make the termination soft, the company can take certain actions such as by asking Karen herself to resign and to convince her to do so by explaining her facts.
Termination always leaves negative affects on the other employees working for the company as they become unsecure about their own job and their motivation level decreases. For this purpose, at the time when Karen is terminated, she should be given various incentives and should be allowed to leave the company in the most respectable manner (Storey 1998).. In case Karen agrees to leave the company and if she joins a competitor, there are many risks involved with this as Karen has worked for Catastrophe Concepts for quite a long period of eight years and she knows a lot about the company.
Moreover, she is the senior sales executive and so she knows all the techniques of selling women’s apparel and where ever she will go she would definitely use her skills. Due to this, there should be some restrictions that should apply to Karen such as she should be made to sign a contract not to provide the company details to the competitor or to provide the competitor with the secrets of the company. (David 1997).
If Karen provides confidential marketing information to the competitor, this would be very bad for Catastrophe Concepts as this will help the competitor not only to know the marketing secrets of the company but it would also help the competitor predict the future actions Catastrophe Concepts is planning to take and on this basis, they might come up with better strategies or they might use the same marketing plans before Catastrophe Concepts applies these strategies and plans and this will prove to be awful for Catastrophe Concepts.
Another possibility that might happen after Karen’s termination is that she might lure and hire other staff currently employed by Catastrophe Concepts. This would also prove to be bad for Catastrophe Concepts as they would loose their employee and with the employee, they also have a lot of possibility off losing company’s information. Moreover, as the employees as already trained by Catastrophe Concepts, they would have to hire a new employee and train them all over again and this involves both financial and time cost. Huselid 1995).
The second part of the paper suggests the restraint of trade clause that should have been included in Karen’s original written contract. Moreover, another thing that needs to be taken care off in this contract should be in context with the duration, extent and geography. For such situations, it is very important for Catastrophe Concepts to have a good human resource department so that they can fulfill their duties and do the best for the employees working in the company.
It is the duty of the human resource department to come up with various strategies and trade clauses for the employees. Previously, however Catastrophe Concepts did not have any such trade clause due to which they are facing this problem now, therefore they should take steps now and should work on the clause so that such problems do not occur in future. It is always necessary for the company to have their legal rules defined to the employees so that they are aware of things.
Having a trade clause would further enable to protect its legal rights and there should always be an agreement between the company and the employee. It is also a wise idea to have employment agreements as these would enable Catastrophe Concepts to guard their wellbeing against the employees working for the company; however the human resource department has to be careful when coming up with trade clauses and they should make sure that they have the most important ones already defined for the company.
Some of the most important ones are mentioned in the paragraphs below. (Micallef & Powell 1997). When an employee agrees not to opt for a profession that is similar to the one he is currently working as in order to prevent competition against the company is possible when an employees signs a non-compete clause. Once the employee signs the contract, he is bound to obey it and he cannot opt for the same profession once he resigns or is terminated from a company.
This contract can help the company to prevent the employee from distributing the company’s confidential information or any kind of trade secrets to the competitor. These secrets might include the company’s marketing strategies or the products the company plans to come up with in future. (Lado &Wilson 1994). Non-Solicitation Agreement would basically help Catastrophe Concepts to guard the employees from stealing information or the customers. Other than this, they can form non-competition agreements as they can center on geography, customers as well as knowledge.
It is not likely for Catastrophe Concepts to stop the competitors from competing with the company but there are certain situations in which such contracts can be signed such as in employee-employer situation. Non-disparagement agreement averts the employee to speak bad things about the employer and the non-interference agreement averts the employee from interfering in relationships such as between the vendors or the customers, etc. Other than this, Catastrophe Concepts can also opt for confidentiality agreement, termination agreement and workplace property agreement, etc.
Confidentiality agreement would prevent the employee from giving the confidential information of the company to the competitors while the termination agreement would help the company in terminating employees by making the employees sign a contract at the time they join the company. Moreover, another problem Catastrophe Concepts might face could be to keep the property at the workplace safe and secure and for this it is essential for the company to make the employees sign the workplace property agreement. (Leat 2001).