What to do if your employees win the lottery

Big Lottery jackpots, particularly the eye-wateringly high Euro Millions, split between fifteen, twenty or more syndicate members, would prove an almost irresistible temptation for those involved to leave a hand-written envelope on the MD’s desk the day after the win was confirmed.

So what happens if you are that MD? One day, your company, which you’ve worked hard to build up from humble origins, is staffed by reasonably happy, presumably loyal workers, leaving you in no doubt that the future is rosy. The next, you’re sitting in your office, looking out at rows of empty desks or machines, kept company by the one or two (quietly fuming) staff who didn’t participate in the syndicate.

As always, the key thing for employers to remember is that preparation well in advance can help to avoid many, if not all, of these problems. Granted, the chances of such a win actually happening are remote but other unlikely events are included in companies’ disaster plans.

Unfortunately, many organisations don’t even consider such a possibility and would end up with major problems if the (almost) impossible did, in fact, happen.

One statistic that might reassure employers is produced by Camelot, which says that over half of those who win large jackpots don’t actually leave immediately but choose to remain in their jobs for some time before they finally make the break. This would be an ideal opportunity for employers to start making plans to recruit replacements or restructure to overcome sudden shortfalls in employee numbers.

Camelot points out that those employees on lower wages are disproportionately represented amongst ticket buyers, having most reason to do so, and there is less of a chance that senior staff, including managers and directors, as well as highly experienced personnel such as IT specialists would be amongst big winners. Nevertheless, a sudden mass resignation of even low-paid workers can be as damaging as the departure of the IT Manager or the Finance Director.

Realistically, there is little that an employer can do apart from invoking clauses in the employee’s contract regarding working out notice. Even if they are successful, the size of the employee’s win may make any penalty little more than a gnat bite. The only other options are insurance and disaster planning.

Insuring the cost

Perspicacious employers will have no trouble locating insurance brokers who offer cover against staff members becoming instant millionaires. Insurers often set conditions for paying out, including the amount of money won or the timespan between the win and the departure of the employee. Cover can also be taken out for the expenses of taking on temporary staff and the recruitment process for finding permanent replacements.

Planning for the worst

All employers ought to have in place a disaster plan; whether that disaster is a fire that destroys the premises, freak weather that causes deliveries to be seriously disrupted, terrorist activity, sudden and prolonged power cuts or cyber-attacks. An element of a disaster plan which is, in a way, analogous to the case of lottery winners is the sudden death or incapacity of key personnel – unlikely but heavy with potential consequences. If an employer has the forethought to plan for the unexpected death of, for example, the senior IT developer, they could certainly adapt those contingency plans to include his or her departure, several million pounds richer.

Where do you think you’re going?

If the employer is intent on deterring their employees from leaving without serving notice, they could opt to include a liquidated damages clause in the employment contract, whereby the employee has to pay the damages that will be caused by their departure. This is less than satisfactory on two counts; firstly, given the size of the employees’ win, it is not likely to be much of a deterrent and secondly, case law suggests that such a clause would be unenforceable anyway.

In the case of Giraud UK Ltd v Smith, Mr Smith worked as a driver and there was a clause in his contract that he had to give four weeks’ notice if he wanted to leave his job. Failing to do so would mean that a deduction would be made from his final pay equal to the number of days short. He left with no notice whatsoever and the company deducted four weeks from his final pay.

The Employment Tribunal found that the sum deducted did not relate in any way to the loss that the company had suffered due to the sudden departure of Mr Smith. New drivers could be found with little or no problem and the Tribunal said that the true purpose of the clause was to deter employees from leaving without giving notice. It was therefore unenforceable.

Another possibility is for the employer to include a restrictive covenant in the contract of employment but it is unlikely that this would be efficacious since such covenants are usually effective only in stopping employees from engaging in activities that are in competition with their old employer once they have left, rather than stopping them from leaving in the first place. Even once they have left, it is not likely that they will be working for a competitor – it is more probable that they will be doing no work whatsoever.

Let’s all play along

Some companies might consider banning syndicates altogether. This is liable to be counterproductive as it could affect the perception of the employer in the wider community if word got out of their decision and it could also, ultimately, lead to an unfair dismissal claim.

Perhaps a better idea would be for the employer to co-operate with any syndicates that are set up, offering opportunities for discussion on what might happen if a big win occurs, and even providing guidance and advice on setting up a syndicate in the first place (it should be borne in mind that employees from certain groups might have cultural restrictions on participating in activities that could be classed as gambling, so employers need to be careful that any scheme they help to set up does not include any discriminatory element).

Good will between employer and employees can make such discussions easier and there is more chance of a positive outcome that will be beneficial to all. Employees might be more likely to work their notice than leave immediately and the employer has a chance to recruit replacements and ensure there is no major break in business.