The turnover of staff in the treasury department can be high. The treasurer should therefore have a clear understanding of the procedures that need to be followed in order to avoid security issues and legal action by disgruntled employees. In this article, we consider the various reasons for members of treasury staff leaving the company and the best practice in each case.
The departure of staff from a company is primarily a matter for the human resources (HR) department. However, it is important that the treasurer is aware of the importance of staff management issues and, where necessary, works in co-operation with HR. In the case of members of the treasury team leaving the treasury, the treasurer is responsible for ensuring that HR is kept informed of all developments and for ensuring that all leaving procedures are correctly followed.
Additionally, it has been proven that in cases where senior managers understand the thinking behind and the need for HR policies, legal actions against the company by employees are far less common.
Reasons for leaving
There are many reasons for a member of staff leaving the treasury team. The precise reason for an employee’s departure will determine the way in which the leaving process should be treated. Reasons for staff leaving a job can be broadly divided into the following categories:
End of a fixed-term contract
Treasury staff are sometimes employed on a fixed-term contract. This usually happens in cases where interim treasury staff are employed, for instance to cover the long-term absence of a member of the treasury team due to illness or maternity leave, or to ‘fill-in’ whilst new permanent staff are being recruited. As the departure date of staff employed on a fixed-term contract basis is known from the outset of employment, a standard leaving procedure can be followed.
The dismissal of staff can be a difficult and unsettling process. It is vital that all cases of dismissal are correctly handled as dismissal is the main source of legal action being taken against a company by former employees. HR should always be consulted as to the correct procedure as soon as you experience problems with a member of your treasury team.
The dismissal of employees is covered by employment law in most jurisdictions. The provisions of employment legislation varies from country to country, but most countries specify that a disciplinary procedure should be followed prior to any employee being dismissed.
All disciplinary procedures should be carefully documented and only undertaken following consultation with HR. Employment legislation will also set out the circumstances in which an employee can legally be dismissed (eg for reason of conduct or capability).
When dismissing a member of staff, you should take care to behave in a calm and polite manner. Arrange a private meeting between yourself, HR and the employee to be dismissed, allowing the employee to bring along a friend or representative if they so wish. Ensure that you have all relevant paperwork to hand and try to be as professional as possible. It has been proven that the vast majority of unfair dismissal claims arise solely as a result of dismissal meetings being unprofessionally and unpleasantly conducted.
The resignation of a member of the treasury team can cause several problems. The major issue with a member of the treasury team resigning is that of recruiting a suitable replacement. The recruitment process can be very time-consuming, particularly if the vacancy being recruited for is a senior position or requires a very specific skill set. However, in terms of leaving procedure, a member of staff resigning is relatively straightforward. Terms of resignation, such as notice periods, will be outlined in the staff member’s original employment contract.
Your HR department may well have in place a policy of conducting exit interviews for departing members of staff. These interviews, which generally take place on an employee’s last day at work, are designed to determine the departing employee’s true views about the company and current work practices and thus highlight areas for improvement.
Feedback from exit interviews can be very helpful, revealing issues which former employees felt were of concern. They are particularly helpful in identifying the root causes of situations where a department experiences a high level of staff turnover – perhaps a combative and difficult member of the treasury team or a difficult working environment are to blame?
Garden leave is the name given to provisions within an employee’s contract of employment which may require them to serve out part (or all) of their notice period at home – ‘in the garden’.
Typically, the employee would continue to receive their full remuneration and benefits package whilst being prohibited from undertaking new employment, accessing company information or contacting the company’s customers for a period of time specified in the contract. Garden leave provisions are often included in the employment contracts of high-profile employees, such as senior treasury staff.
Redundancy is the legal term for the dismissal from work arising from the job in question ceasing to exist. It is a particular form of dismissal and, as such, is strictly controlled by specific legislation in most jurisdictions. It is very important that the special status of redundancy is recognised and correctly applied at all times – the phrase ‘being made redundant’ is often used as a euphemism for an employee being dismissed for some other reason. This is dangerous as it blurs the distinction between an employee being dismissed and being made redundant, exposing the company to the threat of legal action being taken by disgruntled former employees.
The most common causes of redundancy, generally speaking, are either the closure of a company or the relocation of an operational location. However, in terms of treasury, redundancy is more likely to arise as a result of merger and acquisition activity, downsizing operations or centralisation of the company’s finance function resulting in the total number of treasury staff required being reduced. The small size of most treasury teams coupled with the changeable nature of the treasury function means that redundancy is a fairly common phenomenon within the treasury world.
Periods of change within the finance function which result in redundancies can be very demanding for the treasurer. Managing redundancies is stressful – you may be required to make difficult decisions about which employees to make redundant, help soon-to-be redundant employees find new employment and maintain normal treasury operations with a demoralised workforce. The need to remain silent about imminent business changes, such as M and A activity, is an additional burden. You may feel that by concealing the facts about future activity you are in some way behaving dishonestly. The best approach in cases where you have to make redundancies within your department is to communicate with your team as openly and honestly as possible, keeping them informed of all developments as soon as you are able. You should also bear in mind that productivity may well slump as a result of speculation about redundancies.
As a particular type of dismissal, there should be a policy in place setting out the correct procedure in redundancy situations.
Redundancy policy should be guided by the relevant redundancy legislation in place in a particular jurisdiction. However, in senior roles – such as treasury positions – companies often offer employees attractive redundancy packages (far in excess of those stipulated in law) in return for employees waiving rights such as notice periods.
The first issue which should be addressed by a redundancy policy is the question of whether a redundancy is ‘genuine’ or not. This is important, as if a redundancy can be proved to be false (eg as a convenient label disguising another reason for dismissal) the former employee in question may have grounds for legal redress. A redundancy is only genuine if the job currently being performed by the employee being made redundant can be proved to no longer exist. In all other circumstances, the employee should be classed as having been dismissed.
A redundancy policy should outline the correct procedure for selecting which employee(s) should be made redundant. It is important that this selection process be both fair and objective in order to safeguard against later accusations of unfair dismissal. Selection criteria should primarily focus on the skills and experience of employees. In some circumstances, this might take the form of a ‘points scoring’ system, rating the strength of employees in particular areas in order to ensure that the most able staff are retained. In reality, however, particularly in a small department such as treasury, decisions on which employees should be made redundant are automatic, dictated by the need to cut a particular position.
In addition to being able to demonstrate that a redundancy is genuine and the selection has been both fair and objective, employers are required to consult employees about potential redundancy. In some countries (eg the UK), redundancy legislation requires that employers consider whether alternative employment is available elsewhere within the organisation. In cases of large-scale redundancy (usually more than 20 employees), employers are also required to consult employees collectively about possible alternatives to redundancies. Discussions with trade union organisations and relevant government departments may also be necessary – in the UK, the Department of Trade and Industry must be informed of all planned redundancies in excess of 100 employees.
The redundancy policy should also cover the particulars of the redundancy – such as the notice period and the size of the redundancy package.
The departure of treasury staff needs to be carefully managed if problems are to be avoided. Legal problems can arise if the departure of staff is not correctly managed. Additionally, issues such as systems and data security and the recovery of company property can cause trouble if not correctly addressed at the time of an employee’s departure. The relatively small size of most treasury teams and the importance of treasury within the finance function compounds these issues. It is therefore crucial that a procedure governing the departure of staff is established and followed carefully.
A policy governing the departure of staff will most likely be designed by HR and cover the following aspects:
Regardless of the reasons for the member of staff’s departure, HR should always be notified at the earliest opportunity.
A departure date should always be obtained and HR should ensure that the agreed departure date includes any notice periods or garden leave provided for in the employment contract.
You should also contact accounts to inform them of departure details to ensure that all outstanding remuneration is correctly paid.
In cases of dismissal, these issues should all be addressed prior to the actual dismissal of the employee.
Whilst escorting a former employee out of a building may seem a little harsh or unnecessary, you need to be able to confirm that they have definitely left the company’s premises. This is particularly important in cases where an employee has been dismissed. However, if an employee is dismissed very suddenly, allow them to say goodbye to their colleagues if they so wish, before escorting them from the building.
Security is an important issue as employees leave a company. Treasury staff, in particular, are likely to have access to restricted areas of buildings and secure computer systems. Ensure that all security passes which allow the departing employee to enter all company buildings are surrendered before they depart. You should also inform receptionists and security staff of the employee’s departure.
Systems security is a very important issue. Inform the IT department of the employee’s departure to ensure that the member of staff departing will not be able to access any part of your systems in future. Network accounts and remote access accounts should be closed/locked as appropriate. All systems (eg TMS, ERP) to which the employee had access should also be reset, to block the employee. Particular care should be taken with regards to access to shared accounts, as these may also need to be reset – is your wireless network secure? Does the departing employee know any administration/root passwords?
All potentially useful information on a departing employee’s workstation/terminal should also be backed up prior to the machine being wiped or reset. This information should be given to either IT or HR for safe storage until the usefulness of the data has expired – this is solely to prevent information becoming lost.
Finally, you should take care that the departing employee returns all company property they may have been issued with. This could include hardware such as computer equipment and mobile phones or items such as company credit cards.
We would like to acknowledge the assistance of Chris Zwolinksi, Group Treasurer, QBE Insurance Group Limited, in the preparation of this article.