Confidentiality and competition

Winning new clients and customers is enough of a challenge without the added worry of what will happen when a key employee of executive leaves. That’s where our restrictive covenants expertise comes in. Being prepared can make all the difference.

Whether you are faced with an immediate dispute over a restriction or you are looking to protect your business through your employment contracts, as experts, we can help.

What are restrictive covenants and why does my business need them?

Restrictive covenants are an essential part of any contract of employment and particularly for senior employees. They exist to protect your business beyond the termination of employment. They exist to prevent former employees from acting in competition against your business.

These restrictive covenant clauses work together with confidential information clauses to ensure that your business, your client and suppliers bases and your commercial sensitive material are protected.

It is frequently said that these clauses are impossible to enforce or are ‘not worth the paper they are written on’. This is not so. The point is that to be valid and to provide you with useful protection, the terms must meet certain legal requirements. The precise terms that you use to safeguard your business but do no more than is reasonable required to protect your legitimate business interests. This means that what features in your contracts must be sensible, designed to reflect your industry and be a bespoke fit for the individual role and your business needs. Fundamentally, the particular types of restrictive covenants that you might need will depend on many factors including your business, its risks and the seniority, skills and influence of the employee and the role in question. Remember not only to encourage any employee to take legal advice before signing a restrictive covenant agreement and update your restrictive covenants when any employee is promoted or changes role. Restrictive covenants will only work and be taken seriously by your employee and any successor employer, if they are relevant, succinct and powerful.

Familiar type of restrictive covenants include frank non-compete clauses that prevent an employee from working from a competitor. These are actually rarer or perhaps less important than you might imagine because of course they amount to a total, albeit temporary, restraint of trade. More usual are terms that accommodate the scope of working for a competitor but control what an employee may do in that employment. These clauses are vital to prevent that former employee from soliciting or dealing with customers, client, supplier and existing employees or even trying to approach them.

Details, details, details

We are used to seeing the big picture. As specialist employment lawyers, we look for the detail too.

Getting the precise wording and extent of the restriction is a highly specialised area of employment law.  It’s a challenge to make them narrow enough to be enforceable but also wide enough to adequately protect your business interests.  We understand how to tailor them to different sectors and types of business.  And crucially, to specific key roles in your business.

We’ll start by understanding your business, how you work and what you want to achieve, as well as the pressures you’re under from competitors. We will ensure your business is properly protected.

Enforcement

If you need to enforce restrictive covenants in your employment contract or service agreement, we will be ready to act quickly.  We will represent your business using a range of tactics to deter your former staff from breaching their restrictions.  We are highly effective in ensuring they comply.  You will also receive practical advice from us as to what your legal options are.

If you consider that a former employee is acting in breach of their post employment obligations to you then you need to take legal steps to preserve and protect your position. This usually means issuing something called a cease and desist letter. It is a simple but effective piece of correspondence stating the nature of the breach and seeking a series of undertakings. If the response is inadequate or non-existent, then it is time to issue proceedings for an injunction to prevent the employee from breaching the contract. All of this can be timely and costly. The best advice is to have the right restrictive covenants in place, to take them seriously and to ensure that all employees know that the business puts a premium on the value of post termination obligations.

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