Employers often look to include provisions in a contract of employment restricting an employees activities when their employment has ended. These restrictions are meant to protect the employer’s business.
They fall into four main groups:
- non-compete restrictions – which prevent an employee from competing with his or her former employer usually within a specific geographical area for a set time following the end of his employment
- non-solicitation/non-dealing restrictions – which prevent an employee approaching customers of the business for a set time following termination.;
- non-poaching – which prevent an employee from recruiting employees of the employer for a set time following termination;
- restrictions on the use of confidential information – which prevent an employee from using confidential information which he or she has acquired during employment.
The restrictions imposed must be reasonable, be designed only to protect the employers legitimate business interests and extend no further than is reasonably necessary to protect those interests. If they go beyond this they will be struck down as an unfair restraint of trade.
The restrictions will be automatically unenforceable if your employee is wrongfully or constructively dismissed in fundamental breach of contract.
Restrictive covenants need to be carefully drafted to avoid them being declared invalid by a Court. If they are too wide they will fail – the Court will not rewrite them to make them reasonable. Rees Page can draft covenants tailored to your business. We can also advise on the enforceability of your existing covenants, either before or after a dispute arises, and on the practical and legal steps you can take if you believe these are being broken. In addition we can advise you whether any proposed course of action might be a breach of contract on your part which would let the employee “off the hook.”
It is important in restrictive covenant cases to act fast – if you do not take urgent steps to protect your interests the Court may say you have left it too long to obtain an injunction. Call us today if you need help.