It is usual for employers to
insert clauses (especially into senior employees’ contracts)
which seek to restrict their conduct post-termination. It
is also becoming more and more common for employers to put
these into the contracts of junior employees.
Restrictive Covenants seek to prevent you for a set period
of time after termination of your employment (usually 6, but
sometimes 3 or 12 months) from working for a competitor, poaching
clients, contacts and employees away from the company and/or
using confidential information learned during the course of
your employment.
Whether such clauses are actually enforceable against the
employee will depend upon the particular circumstances of
the case. However, the following principles will usually be
taken into account:
The clause must not be any
more restrictive on the employee than is reasonably necessary
in the particular circumstances to protect the employer’s
business. If the clause is too restrictive then it is
likely to be struck out as unenforceable by the Courts.
The employer must be able to
show that they have legitimate business interest which
require protection. They cannot simply seek to restrict
an employee competing against them just for the sake of
it after they have left. They need to be able to show
the employee’s potential actions could have a detrimental
effect on their business.
What is reasonable will depend
upon the employee’s position within the business.
For example, it will be more reasonable to seek to restrict
the actions of senior employees who are regularly in contact
with the customers and contacts of the business than it
will be to seek to restrict the actions of the office
junior.
If you do have restrictive covenants in your contract, your
options
post-termination can be severely limited. This could leave
you unable to start work with a new employer for the period
of time set out in the agreement. This is usually six months
but is sometimes up to a 12 months.
You may decide to ignore the restrictions when you leave
and go and work for the employer of your choice, and taking
your clients and contacts with you. You would, however, run
the risk of your old employer issuing legal proceedings against
you to enforce the restrictive covenants. They could seek
an injunction restraining both you and your new employer from
being in breach of the covenant.
Such applications are rare, but you should nevertheless not
recklessly breach your covenants without first taking professional
advice. It could otherwise be a costly mistake.
Further information can
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Zeffertt Weir Solicitors