News & Views

The ‘Shot across the bows’ letter


Unless you intend to – and are in a position to – follow through with formal action, think twice before sending a warning letter to an ex-employee.

So-called “shot across the bows” letters are commonly sent out to warn against breaching post-termination restrictive covenants, but they invariably do little more than tip the individual off that you’re onto them, and prompt them to cover their tracks more carefully (making it harder for you as the former employer to substantiate your concerns).

They are often sent for emotional reasons or else prompted by mere suspicion (as opposed to proof) of wrongdoing, rather than on the basis of any actual evidence of unlawful behaviour. This limits the impact of the letter and can make the sender (the former employer) appear needlessly aggressive.

Of course, in some circumstances it is appropriate to send warning letters, but more often than not a former employer would do better to sit tight and wait until actual evidence of wrongdoing emerges, and send out formal pre-action correspondence at that point. That way, the letter has more clout and will be far more effective in terms of what it is intended to achieve, which is to stop unlawful conduct and “send out the message” that, as a business, you will not tolerate such activity. It will also put you in good stead in the event that you do need to follow through with Court action.

Warning letters are not to be confused with reminder letters. Commonly, an outgoing employee will be sent a letter by the employer at or around the time of leaving, which (as well as dealing with other matters) reminds the employee of restrictive covenants in the contract of employment. This does no harm at all and is to be encouraged as a standard procedural step because it makes it much harder for an outgoing employee to claim that he or she had no recollection of any such covenants.

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