What are Restrictive Covenants/ enforceable?

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

What are Restrictive Covenants and are they Enforc

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.  


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Cancer Research UK Free Will Service

Maples Solicitors are pleased and proud to announce that it is working in partnership with Cancer Research UK to offer their Free Will Service for the over 55’s.

The vast majority of people have been affected in some way by cancer and we wish to support Cancer Research UK in its life saving work by offering their Free Will Service.

Over a third of Cancer Research UK’s research is funded by gifts in Wills and we believe we can play a vital role in helping in the fight against cancer. Writing your will for free using the scheme could help beat cancer sooner.

Please contact a member of our Wills and Probate Department:-
Jamie Dobbs- jamie.dobbs@maplessolicitors.com
Jane Mawer- jane.mawer@maplessolicitors.com
Faye Blair- faye.blair@maplessolcitors.com

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

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Gemma Mayer LLB

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Anita Toal LLB BA

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James Turner BA

James Turner was extremely helpful with our buying process. Everything went smoothly. We are very happy with the level of professionalism demonstrated by the office. Highly recommended solicitors. Will definitely do business with them again.

Daven Naghen LLB

"Daven provided an excellent service, from attending the first interview with me to the final court appearance. He filled me full of confidence that he would defend me to which he did and come out with an excellent outcome in view of my position that I had put myself in."

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

Mike Pepper gave us excellent advice. He was always most helpful and accommodating giving lucid explanations every step of the way. Thank you Mike.

Donna Sandison FCILEx

Donna has been helpful and professional every step of the way during the process. Always on hand to answer any queries and totally professional and friendly at all times.