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In December 2022, I was made redundant. Citing financial challenges, my employer eliminated several roles across the company. I was ten months into leading the Marketing team and about to start my Christmas break.
It stung. Additionally, almost six months later, I’m still waiting out my non-compete.
It raises the question: When faced with an arbitrary set of restrictions, what becomes of the worker? And by its very definition, if redundant means not or no longer needed, how can a former employer exercise such control over an individual’s right to employment?
In this scenario, no one wins. Brands are deprived of talent, while professionals lose out on multiple fronts. For creative industries to thrive, we need to move on from antiquated hiring practices and allow the people behind the work to have access to opportunities without limitation.
The global picture
In January 2023, the U.S. Federal Trade Commission announced a notice of proposed rulemaking that would outright ban non-compete clauses from employment contracts. The agency suggests these measures stifle GDP growth, hamper innovation and impair entrepreneurial activity. Should the ban go ahead, it will take effect retroactively, impacting roughly one-fifth of workers in the U.S. who signed contracts contingent on accepting a non-compete. The FTC claims the withdrawal of non-competes could increase wages by $300 billion per year.
This follows a similar consultation launched back in December 2020 by the U.K. government’s Department for Business, Energy and Industrial Strategy. The call for evidence set out to gather feedback on two motions; to make non-compete clauses enforceable only when the employer provides compensation during the term of the clause and to make post-termination non-compete clauses unenforceable.
Following the consultation, the U.K. government announced a plan to limit non-compete clauses’ duration to three months. A timeline for when this comes into effect is currently unknown.
The picture varies dramatically across labor markets. In Chile, India, Mexico and Vietnam, post-employment non-competes are void. Countries like Poland, France and Germany mandate a proportion of the terminated employee’s salary be paid through the non-compete period.
In other EU countries like Italy and the Netherlands, no such provisions exist. Workers’ rights have historically been governed by each EU member state, but spurred on by the FTC’s motion, the European Parliament could decide to run its own consultation into anti-competitiveness within labor markets.
Limiting movement within the sector
Though the impetus may be vastly different, one thing these consultations seem to agree on is innovation being hampered when we limit competition.
Ingenuity is the lifeblood of our industry. It’s what powers the flywheel that attracts the brands who want to work with us and, in turn, the audiences who enthusiastically respond to creative outputs.
Claiming IP rights when using a non-compete can be stifling to human ideas. It limits movement within the sector, deprives knowledge workers of economic opportunities and kills entrepreneurial ambitions. The laws protecting trade secrets and proprietary data will forever safeguard the company’s interests.
In the absence of challenger brands, it’s consumers who lose out. This has been proven time and time again when disruptor brands or new agencies enter the market delivering something new and exciting.
Reasons to ditch the non-compete
A 2022 study published by the UK Advisory, Conciliation and Arbitration Service estimates that 19 percent of employees in the UK are likely to face redundancy over the next 12 months. As of April 2023, year-to-date job cuts in the U.S. have soared to 270,416, an increase of 396% from the same period in 2022.
We are amidst one of the toughest employment climates of our lifetime. As regulations start to change, employers must reconsider their position on what this could mean for them moving forward.
Losing out on talent
Employees—especially those with tenure—are now much better informed when it comes to understanding the restrictions that come with a non-compete. All the investment made in getting the candidate to the final stage could amount to nothing once a non-compete is presented.
Brand positioning is affected
The marketing ecosystem is intimately acquainted with one another. We’re all using the same platforms, technologies and partners to get the job done. Individuals regularly crisscross companies, jumping from agency to agency, to client-side and back again. If you think in the context of optics, it would be wise to ensure employees have a satisfactory experience with the company from beginning to end.
Cause and effect
There’s a beginning, middle and end to the cycle of employment. You court candidates to get them through the door. Once they join, you assign interesting projects, encourage them to achieve great things and hope they stick along for the ride. If the relationship ends by no fault of the employee, you still have a duty of care to safeguard the individual.
Layoffs have sadly become all too common these days. Rather than being the source of anxiety and financial distress, be magnanimous and have a policy in place for how the company rallies behind displaced employees.
Employer branding matters
In tech industries, it’s not uncommon to require an extensive notice period when a senior employee announces their departure. It can ultimately work to the employee’s advantage in a termination scenario, as a former FAANG colleague found out recently. Not only was she compensated for the 6-month notice period required, but she was also relieved of her non-compete obligations and given continued benefits coverage. Her departing words to me were, “Despite everything that went down, I will never allow anyone to speak ill of company X.”
Our industry is built on relationships. The networks we create with agencies, the partnerships forged and the trust we establish with customers are only made possible by the people powering the industry. We must acknowledge that when you stonewall part of the community who are responsible for keeping business flowing, the whole system runs the risk of getting hurt, and we all ultimately suffer.
It’s time for the marketing industry to accept that behavioral change is required. Let’s start doing things differently.
