Legal advice is essential as the courts may view these covenants as being in restraint of trade and therefore unenforceable unless they are drafted carefully. Employers must be able to show that the covenant goes no further than is reasonably necessary to protect their business.
We advise employers on drafting enforceable covenants and we can seek urgent court injunctions to prevent former staff from using confidential information or from soliciting clients. Our employment solicitors can also pursue the employee, or in some cases their new employer to obtain damages, if the covenants have been breached.
Our legal advice in these matters always has your firm’s interests at its core. Wherever possible, we will help you take preventive measures, so that court hearings become a last resort. That said, we will not hesitate to take swift and decisive action through the courts if your commercial interests demand it.
Post-termination restrictions (non-compete, non-solicitation of clients, non-dealing with clients, non-poaching of key employees etc.) are particularly important for senior and/or client-facing employees and those with access to the business’ confidential/proprietary information.
If you are a start-up, for example, and you have a business partner or a key member of technical staff, you will likely want to try to restrict them from being able to leave and go straight to a competitor, or solicit your clients. Without express provisions of this kind in their employment contracts, the business has very limited options to protect itself when key employees leave.
As a starting point, these types of clauses are unenforceable in the UK for public policy reasons as an unlawful restraint of trade. However, they can be enforced if they are carefully and clearly drafted and are necessary to protect the employer’s legitimate business interests (such as confidential information, good will and stability of the workforce). The narrower or shorter they are in terms of duration, scope and reach, the more likely they are to be enforceable. Generally speaking, restrictive covenants are very likely not to work unless drafted by a lawyer and reflect what the courts have decided in relation to the enforcement of these types of clauses.
We recommend that you seek advice when you are taking on new employees. One size does not fit all, so when you are preparing a contract for a new joiner, restrictions need to be tailored to the particular role and individual and be consistent with other contractual provisions e.g. notice.
Post-termination restrictions also need to be updated, so you should also seek advice when key employees are promoted/change roles. When considering the reasonableness of restrictions, the courts will only have regard to the employee’s job title and seniority at the time of entering into them.
We will also advise and assist with the enforcement of post-termination restrictions where you believe employees have breached them, or intend to breach them. This sometimes involves obtaining an injunction from the high court, but you have to act quickly in this regard to maximise your chances of being successful.
We are experienced employment law specialists and will help prepare bespoke, tailored restrictions for new joiners, and for employees being promoted into key roles, to maximise the prospects of successful enforcement. We will also act quickly and robustly to seek to enforce post-termination restrictions where this is necessary, and/or if appropriate seek to agree/sue for damages for breach of contract.
We also bring a commercial approach and as well as robustly pursuing enforcement through the courts, we will help achieve a satisfactory settlement of restrictive covenant disputes and advise on other more practical business protection measures and solutions.
Spending some time and money upfront on well-drafted and bespoke post-termination restrictions is an investment because these are important business protection tools. They should be professionally drafted to have maximum prospects of being enforceable. Without these restrictions, businesses can and have been ruined. We will provide clear and upfront cost information to ensure that you remain in control of your costs at every stage.
Writing a letter before action to a former employee of our client, a marine-tech company, who was proposing to join a competitor in breach of his non-compete. After robust correspondence, and steps taken to protect the client’s legal position, we reached a satisfactory settlement on the basis of a shorter restriction period.
Drafting bespoke post-termination restrictions for a private hospital concerned with staff leaving and setting up a similar service nearby.
The answer is that non-competes are the most difficult to enforce, but they can be enforced. Enforceability depends on the specific factual circumstances and the scope of the restriction.
They can be enforced if they are carefully and clearly drafted and are necessary to protect the employer’s legitimate business interests (and this will usually involve an assessment of why a non-compete is needed in additional to other restrictions, such as non-poaching of clients). The narrower or shorter they are in terms of duration, scope and reach, the more likely they are to be enforceable.
When considering the reasonableness and enforceability of restrictions, the courts will only have regard to the employee’s job title and seniority at the time of entering into them.
So although it may be reasonable in her current role of Sales Director to have a 12-month non-dealing with clients restriction, if she signed up to this restriction 10 years ago as a customer service adviser, the restriction is unlikely to be enforceable. Post-termination restrictions should be reviewed and updated when employees are promoted/change roles.
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|Address:||Hodge Jones & Allen Solicitors 180 North Gower Street London NW1 2NB|