Enforcing covenants
Enforcing Covenants
Enforcing Covenants
These are restrictions on what your employees can do once their employment has ended. We often hear that restrictive covenants are unenforceable. While this is the Court’s starting position the test is more complex and involved than this.
As an employer you can protect your “legitimate business interests”. However, anything that seeks to prevent more than this will be unenforceable.
Covenants tend to fall into the following categories:
Non-compete. This aims to prevent your staff from working for a competitor. This is the hardest covenant to enforce, so very careful consideration is needed when trying to enforce them or when including such clauses in your contracts of employment.
Non-dealing. You can seek to prevent your staff from having any business dealings with your clients/customers. This is more restrictive than non-solicitation because the non-dealing covenant will bite even if your client/customer approaches your former employee.
Non-solicitation of clients/customers. This seeks to stop your former employee from approaching your clients/customers to secure business in competition with you.
Confidential Information. You can protect this if you have set out what happens to your confidential information upon termination of employment; namely that the former employee should respect it and not use or disclose it.
Non-poaching of colleagues. You can seek to stop your former employee from poaching other members of staff.
Other obligations. You can enforce other obligations on the former employee, such as, to disclose the covenants to any prospective employer and/or to report any breach of the covenants to you (although most employees will ignore that one).
In addition to the covenants, you should have the right to place employees on garden leave once notice has been served. This affords you the most protection, as the individual remains your employee for this period meaning s/he will be bound by all the terms of the contract, not just the covenants.
Ensuring you have the maximum protection, while imposing obligations that are enforceable is a specific skill, and something our expert employment lawyers are well versed in assisting with.
If you have an employee who you think has breached or will breach his/her contract in this regard, we can assist in protecting your position. This may involve requiring the individual to sign an undertaking and/or pursuing an injunction. Our expert employment law solicitors will be able to advise on your options, including, whether you involve the new employer.