Dealing with Disgruntled ex-Employees

Dealing with Disgruntled ex-Employees

Authors: Megan Adams & Zeinab Farhat, Progressive Legal

The departure of an employee can be a challenging process for any business, and in some cases ex-employees may leave with lingering dissatisfaction, resentment, or negative feelings. Disgruntled ex-employees pose potential risks to a company, such as engaging in harmful actions, leaking sensitive information, or filing lawsuits.

To mitigate these risks, employers should adhere to various legal principles and adopt general best practices to address the concerns and risks of disgruntled ex-employees effectively. 

Who are disgruntled ex-employees? 

Disgruntled ex-employees are individuals who have left their employment with a company or organisation and harbor feelings of dissatisfaction, resentment, or unhappiness about their past employment experience.  

Any ex-employees may be disgruntled, not just employees whose engagement was terminated against their wishes.  Disgruntled ex-employees may have negative emotions stemming from various reasons, such as: 

Unresolved Workplace Issues 

Disgruntled ex-employees might have experienced conflicts with co-workers, managers, or the company’s culture, which were not adequately addressed during their employment. 

Termination or Layoff 

Employees who were terminated or made redundant might feel resentful about the circumstances surrounding their departure, such as feeling unfairly treated or believing the decision was unwarranted. 

Unmet Expectations 

Disgruntled ex-employees may have had high expectations regarding job responsibilities, growth opportunities, or compensation, which were not met during their tenure. 

Poor Communication 

If the company had inadequate communication channels or did not address employee concerns effectively, it could lead to negative emotions among departing employees. 

Perceived Injustice 

Some ex-employees might perceive favouritism, discrimination, or unfair treatment during their employment, leading to negative feelings after leaving. 

Unfulfilled Career Goals 

If an employee’s career aspirations were not supported or acknowledged, they may become disgruntled upon departure. 

Organisational Changes 

Changes in management, company policies, or restructuring might contribute to an ex-employee’s dissatisfaction with the company. 

Financial Issues 

Negative emotions can arise from disputes and misunderstandings over wages, benefits, or unpaid compensation. 

How can a disgruntled ex-employee harm your business? 

Disgruntled ex-employees may take action to threaten and jeopardise the reputation of your business and its ability to trade. If the claims are untrue, this can be considered as defamation. Examples of threats and risks include: 

Negative Online Reviews 

Ex-employees might post negative reviews on public review platforms, social media, or business directories, criticising the company’s practices, management, or products/services. 

Social Media Attacks 

Disgruntled ex-employees may use their personal social media accounts or create anonymous profiles to spread negative information or rumours about the company, its employees, or its business practices. 

Leaking Sensitive Information 

Ex-employees could share confidential or proprietary information about the company, its clients, or business strategies with competitors, the media, or the public. 

Disparaging Comments 

Ex-employees might make derogatory or false statements about the company, its employees, or its products/services in public forums, meetings, or conferences. 

Reporting to Authorities 

Disgruntled ex-employees may report alleged misconduct, breaches or violations of obligations within the company to regulatory bodies, potentially leading to investigations or legal scrutiny. 

Sabotaging Projects 

In some extreme cases, ex-employees might attempt to sabotage ongoing projects or intentionally cause disruptions to harm the company’s reputation and operations. 

Filing Baseless Lawsuits 

Some ex-employees may file unfounded legal claims against the company, such as wrongful termination, discrimination, unpaid wages or entitlements or harassment, with the aim of tarnishing the company’s image. 

Organising Protests or Boycotts 

Disgruntled ex-employees may try to gather public support against the company by organising protests, boycotts, or petitions, intending to damage its reputation. 

Influencing Media Coverage 

Ex-employees may contact journalists or media outlets to share negative stories about the company, seeking to gain negative publicity. 

How do I mitigate the risks of a disgruntled ex-employee? 

Employers must adhere to various legal principles and adopt best practices to mitigate the risks of a disgruntled employee. 

Maintain Clear and Comprehensive Employment Contracts 

A well-drafted employment contract is essential in protecting the interests of both the employer and the employee. It should include provisions related to confidentiality, non-disparagement, non-compete, and intellectual property rights. These contractual clauses can deter ex-employees from engaging in harmful activities and provide the employer with legal remedies in case of breaches.  You should be sure to update your employment contracts when you change an employee’s employment conditions to ensure that each party’s obligations are properly documented.   

Follow Proper Termination Procedures 

Employers should ensure that the termination process adheres to the terms laid out in the employment contract. Compliance with these procedures helps minimise the likelihood of disputes and allegations of wrongful termination, which could exacerbate the disgruntlement of the ex-employee.  

If the termination of the employee was not handled properly or was done in a way that contravenes Australia’s unfair dismissal laws, the ex-employee may file an unfair dismissal claim with the Fair Work Commission. 

Respect Employee Privacy 

During and after the employment relationship, employers must respect the privacy rights of their employees. Handling employee information and data responsibly can help prevent potential grievances and maintain a professional relationship even after an employee’s departure. 

Offer an Exit Interview 

Conducting an exit interview can be beneficial to both the employer and the ex-employee. It provides an opportunity for the departing employee to express their concerns and grievances in a controlled environment. In turn, the employer can gain valuable insights into potential issues within the business and address them proactively. 

Exit interviews can be a fraught area of employment practice.  Many people do not trust exit interviews.  It is important to clearly set expectations around exit interviews and genuinely be open to hearing what a soon-to-be ex-employee says. 

Provide Information about Post-Employment Benefits 

If applicable, inform ex-employees about their post-employment benefits, such as severance packages, continuation of healthcare coverage, or retirement plans. Ensuring a smooth transition can minimize feelings of discontent and prevent potential legal disputes. 

What do I do if an ex-employee is threatening my business? 

Document the Threats 

Keep a record of all the threats made by the ex-employee. This includes any written communication, emails, social media posts, or messages. You should also keep a record of all verbal threats or comments, including who was around you, where you were, and exactly what was said.  Having a clear record of the threats can be crucial if legal action becomes necessary. 

Educate Employees 

Inform your current employees about the situation and any necessary safety or administrative precautions to take. Encourage them to report any suspicious activities or communications related to the ex-employee.  You should be cautious here, however, not to disparage or defame an ex-employee when discussing them with others. 

Communicate Clearly and Professionally 

Open and transparent communication is crucial when dealing with disgruntled ex-employees. Avoiding confrontations or responding with emotional reactions can help prevent escalations. Instead, maintain a professional demeanour and keep all communication factual and respectful.  If you are finding this difficult, an independent party such as a solicitor, can help you navigate the conversations or conduct them.   

Avoid Retaliation 

Under no circumstances should an employer retaliate against a disgruntled ex-employee. Retaliation is unlawful and can lead to significant legal consequences for the business. One area of risk is discussing the ex-employee with others – this is a very fraught time for a business and many business owners find themselves accused of defamation for discussing the ex-employee. Instead, focus on resolving issues through legal means and proper channels. 

What legal action can be taken against a disgruntled ex-employee? 

A business can consider several options when dealing with a disgruntled ex-employee depending on the specific situation and the nature of the ex-employee’s actions. Here are some potential legal actions: 

Cease and Desist Letter 

Sending a cease-and-desist letter is a common initial step taken by employers to address the actions of a disgruntled ex-employee. The letter formally demands the ex-employee to stop engaging in harmful conduct, such as making false statements or harassing the company, and warns of potential legal consequences if they fail to comply. 

Breach of Contract 

If the ex-employee violates any terms of their employment contract, such as non-disclosure, non-compete, or confidentiality clauses, the employer can take legal action for breach of contract. 

Defamation 

If the ex-employee spreads false and damaging statements about the employer or the company, the employer may have grounds to pursue a defamation claim. 

Injurious falsehood 

Injurious falsehood is a claim that is often associated with defamation claims, but it is much harder to prove. It must be proved that the ex-employee made a false statement about your business, that the statement was published to a third person, that there was an element of malice, and that the statement caused actual damage to your business. 

Misuse of Confidential Information 

If the ex-employee uses or discloses confidential information or trade secrets of the company, the employer can take legal action to protect its intellectual property rights. 

Breach of Fiduciary Duty 

If the ex-employee, particularly if they held a position of trust within the company, breaches their fiduciary duty by acting against the company’s best interests, legal action can be pursued. 

Harassment or Discrimination 

If the ex-employee engaged in harassing or discriminatory behaviour during their employment, the employer may take legal action under anti-discrimination laws. 

Enforce Non-Disclosure Agreements 

If the employment contract includes non-disclosure and non-compete agreements, take appropriate legal action in case of breaches. Promptly addressing violations of these agreements can deter disgruntled ex-employees from sharing confidential information or joining competitors. 

Check out our article on Non-Disclosure Agreements here! 

Undertakings 

You may ask the employee to promise that they will stop using your business’s private information and follow the rules they agreed to when they worked for you. These promises are called “undertakings.” It’s important to make sure the undertakings are written carefully because they might be used in court if the situation gets more serious. 

Check out our article on Undertakings here! 

Injunctions 

An injunction is a court order that restrains the ex-employee from carrying out specific actions. Employers can seek an injunction to prevent the ex-employee from further harming the company’s reputation, sharing confidential information, or engaging in any other detrimental activities. 

Caselaw

Here is a case law example of a defamation claim succeeding against a disgruntled ex-employee. 

BeautyFULL CMC Pty Ltd v Hayes [2021] QDC 111

The case involved several online publications on Instagram by an ex-employee that defamed the plaintiff’s business. The posts claimed that the plaintiffs were not to be trusted, acted dishonestly, and engaged in criminal behaviour and unethical conduct. 

The Court decided: 

– that the posts were intentionally false with no basis; 

– that the business had suffered loss of business reputation because of the defamation; 

– that the publication of the posts was designed to cause hurt and distress; and 

– that the posts were defamatory to the plaintiffs because the allegations would lower their reputation of ordinary reasonable members of society. 

The defendant had 1844 followers and it was deemed likely that some of the defendant’s followers knew of the plaintiff’s business and may have themselves been followers of the plaintiffs. The defendant was ordered to pay damages to the plaintiffs of the total amount of $85 222. 

For more information on this case, check out the full summary of the case here! 

Key Takeaways 

Disgruntled ex-employees can be a significant concern for employers, posing potential risks to a company’s reputation, intellectual property, and even overall business operations. As such, it is crucial for employers to be well-informed about the legal implications and risks of dealing with disgruntled former employees and to implement effective strategies to mitigate potential risks.  

If an ex-employee is damaging the reputation of your business, do not hesitate to reach out for us to help. We have the legal expertise and knowledge to handle these situations appropriately and effectively. Call us on 1800 820 083 of fill out the form on this page! 

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