May 1, 2014 1:05 am

Moving between employment and self-employment comes with challenges

High angle view of business executives walking through a revolving door©Ingram Publishing/Alamy

Ins and outs: tread carefully to avoid disputes

From the manager’s chair

I work at a large media agency, but am thinking of setting up my own business. It is a small world and I don’t want to slam any doors when I leave or as I recruit. What do I need to think about?

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David Greenhalgh, partner at Twenty Twenty Law, says: One of the greatest challenges when starting a business is answering the question “Where are my clients going to come from?” Similarly, if you intend to bring in staff, where are you going to recruit them from? If the answer to either question is “from my current employer”, then you need to tread carefully.

In a competitive market, employers are eager to prevent influential employees setting up in competition and taking clients and key staff.

If a dispute arises, the lengths employers will go to can be extreme – the nuclear option for your employer is to apply for an injunction against you, which could not only hamper or fold your new venture, but also leave you with a very large legal bill.

Before you do anything, dust off your contract of employment. Your contract should set out the protocol for when you hand in your notice. Employers often give themselves a lot of power and flexibility in this area – yours may require you not only to return all confidential information before you leave but also delete client contacts from your LinkedIn and other social media accounts.

In terms of timing, your employer might be happy to pay you in lieu of your notice period or could require you to work your notice, either in the office as usual or by putting you on gardening leave. Also, beware that the timing of your resignation could affect your bonus entitlement.

Your contract may also contain post-termination restrictions, to stop you from setting up in competition, contacting clients or poaching staff after you leave. As you gear up to hand in your notice, you should be very discreet. Almost everything you do on a work computer, tablet or phone could be recovered by your employer and used against you later on.

Legal considerations aside, one of the key elements of setting up on your own is to not poison the relationship with your employer as it could prove an ally and referral source. As with any break-up, honesty and openness are often the best policy.

But be aware that your employer could view your departure as an act of war, in which case you should play your cards close to your chest.

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From the employee’s chair

In the recession I chose to become self-employed because I could not find another job. How easy will it be for me to return to an employed role?

Simon Broomer, consultant at Career Balance, a City of London job coaching service, says: Having made the transition from being employed by large organisations to working freelance and then back to an employed role myself, I know that time working for yourself does not mean that you are no longer employable.

However, there are misplaced perceptions and prejudices you may have to overcome from recruitment consultants, headhunters and employers themselves.

They may be concerned that you will find it difficult to adapt to working in a structured environment again and taking orders from others, complying with organisational processes, systems and policies.

They may also fear that you could quickly return to working for yourself after realising the relative freedom of being your own boss.

There are three things you can do to make yourself attractive to employers after time working for yourself:

First, consider taking a short-term or a part-time role in a medium to large organisation. This will help demonstrate you can adapt to working in this kind of environment again. I took a junior marketing role with a large publisher before securing a full-time role in a very different sector.

Second, think how best to present your self-employed career on your CV and covering letter. You may want to start with your employed career, and then set out your self-employed experience. For the latter, draw attention to the things you have achieved that will be of most value to an employer, for example, managing financial aspects of your own business, winning new clients, or creating a website.

Third, in conversations with contacts and recruiters, emphasise that working for yourself has been a positive experience that has enabled you to develop skills and knowledge relevant to working inside an organisation. Focus on your successes, rather than failures as you explain why you want to return to employment.

Remember, you are not the only one in this position. The Financial Times recently reported on an Ipsos Mori poll that found 72 per cent of those who had become self-employed in the past five years preferred their current situation to being an employee.

In other words, a quarter of those surveyed who became self-employed through necessity or choice, have decided they want to return to working for someone else.

Send your queries to: workplace.questions@ft.com

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