What are Restrictive Covenants/Enforceable?

25th October 2011
What are Restrictive Covenants/Enforceable? image

What are Restrictive Covenants/Enforceable?

What are Restrictive Covenants?

Businesses often include post-termination obligations into an employee’s contract of employment, whereby an employee agrees not to do certain things after he or she leaves the business.  These are called Restrictive Covenants.  There are broadly speaking four types of Restrictive Covenants:-

  1. Non-competition clauses

These seek to prevent the ex-employee from working for a competitor or a directly competing business, usually within a specific geographical area for a set period following the termination of employment. 

  1. Non-solicitation clauses

These bar the ex-employee from soliciting clients, or potential clients, for a set period following the termination of employment. 

  1. Non-poaching of employees clauses

These prevent an ex-employee from recruiting former colleagues for a set period following termination of employment.

  1. Confidential information clauses

These prohibit the use of any confidential information (e.g. trade secrets, customer details etc) acquired by an employee during his or her employment. 

Are they Enforceable?

The starting point is that all of these clauses are anti-competition and in restraint of trade, and therefore void.  If an employee challenges the validity of such clause, the employer must prove that the clause is justifiable.  To do this the employer must show that the clause does no more than is reasonable to protect his legitimate business interests. 

What is “reasonable” and what is “a legitimate business interest” are complex questions and the answers shall vary from case to case. 

For example a claim which prevents an employee from working for a competitor for a period of 12 months anywhere within the United Kingdom may be enforceable against a national sales director but is unlikely to be enforceable against a hairdresser who only deals with clients from the immediate locality.

Another example may relate to a clause prohibiting the solicitation of clients.  If the ex-employee had introduced the client originally to the business, it is unlikely that a clause prohibiting the solicitation of such clients by the ex-employee could be enforceable. 

In short some times they are enforceable and some times they are not, legal advice is always necessary on such matters especially with regards to the drafting of such clauses.

Maples advise that generally speaking in appropriate cases Restrictive Covenants should be included in an employee’s contract of employment.  Even if the clause is not enforceable, the Restrictive Covenant may give some protection to your business as it provides leverage in negotiating a settlement with an ex-employee or for persuading the ex-employee not to attempt to solicit clients etc since the ex-employee may not want to take the risk on a high cost legal action. 

If you require advice on Restrictive Covenants then please contact Daven Naghen on 01775 722261, daven.naghen@maplessolicitors.com or at 23 New Road, Spalding, Lincolnshire PE11 1DH or Gemma Mayer on 01775 722261, gemma.mayer@maplessolicitors.com or at 23 New Road, Spalding, Lincolnshire PE11 1DH.


Maples supporting Macmillan Coffee Morning image

Maples supporting Macmillan Coffee Morning

On 29th September 2017 Maples Solicitors LLP will be hosting a coffee morning as part of Macmillan’s “World’s Biggest Coffee Morning”.

Tea, coffee and cakes will be served from 10:00am until 1:00pm and all donations received will go to Macmillan Cancer Support to assist them with providing medical, emotional, practical and financial support to those facing cancer and their families.

At the same time, Maples will also be running a free Wills, Lasting Powers of Attorney and Probate clinic so that whilst you are in the office you may take the opportunity to discuss any of these with one of the Private Client Team with no obligation to commit. You can use the time to raise any questions you may have about making a Will, who you could appoint as Executors, whether you need a Power of Attorney or how a Power of Attorney works, for example.

Maples hope to see their existing clients join them for the coffee morning and very much look forward to meeting new people- everyone is welcome!

If you would like to discuss any matters in relation to Wills, Lasting Powers of Attorney or any Probate related matters prior to the coffee morning then please contact one of the lawyers in our private client team:-

Jane Mawer- jane.mawer@maplessolicitors.com
Jamie Dobbs- jamie.dobbs@maplessolicitors.com
Faye Blair- faye.blair@maplessolcitors.com

Or telephone the office on 01775 722261 and ask to speak with one of the team.

Read More

Testimonials

Gemma Mayer LLB

"I would highly recommend Maples Solicitors, especially Gemma Mayer, for any conveyancing work. The level of support and professionalism was excellent at all times. I also felt if I needed to ask or clarify anything that it was not an issue. Buying and selling a house is stressful enough, but Gemma helped me through it step by step."

Anita Toal LLB BA

"I think you are brilliant. You can use my comments above. You are efficient, friendly and quite clearly very good at what you do. Mainly you don’t leave people hanging around too long for." "So easy to talk to her and she understood what I wanted. She put me at ease and I cant thank her enough"

Daven Naghen LLB

"I felt the service I got from Maples was excellent and was very honest all through the process. I would recommend Maples as a first class Solicitors group"

Faye Blair LLB

Faye was excellent, sensitive and acted very well to the time constraints we faced. Great service and dealt with compassion at such sad times made the process less painful very professional.

Jamie Dobbs ACILEx

Over the last forty years I have cause to deal with many law firms both in a personal and professional capacity, including some ‘top’ London Companies. In all of those dealings I have never found anyone as proactive and so willing to offer help and advice as Jamie Dobbs. During the last two years Jamie guided my parents through the completion of Lasting Powers of Attorney. Helped myself with the use of the LPA and recently dealing with Probate and Estate Administration following their death.

Mike Pepper MA

This is the second time we have used Mike Pepper at Maples Solicitors in the sale of our house. We cannot praise Mike enough for the highly efficient and professional service that he has provided us with. He is by far the best solicitor we have ever worked with, and the service that he has provided us with has gone far and beyond anything we have ever experienced. We have found the whole process to be a very relaxing experience.

Claire Smith FCILEx

Claire Smith has been amazing in every way. I highly recommend her and I am so grateful for all her help. She’s professional on all levels, reliable, extremely organised and I will be recommending her to everyone. I’m very lucky to have had her representing me and I can’t thank her enough. She is an asset to Maples. Thanks so much Claire!

Anita Zaborniak

We found it a pleasure to deal with Anita Zaborniak, she was most helpful and informative and kept us up to date with the progress of the purchase of our new home. If we were to move again we wouldn’t hesitate to use Maples again.