Restrictive Convenants

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.

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