Restrictive Covenants

Employers often include restrictions within an employment contract, which seek to prevent employees doing certain things once their employment is over, such as working for a rival business, or taking their customers.

The employer’s intention is to protect themselves against the employee using the knowledge and information gained at the workplace for the benefit of their new business. They also want to avoid their customers and employees being ‘poached’.

These restrictions are called restrictive covenants, and will typically require the employee to agree not to work for a business in the same industry for (say) 12 months after leaving. They might also require the employee not to work for a rival in the same town, or not to solicit work from customers.

If you act contrary to the covenant, the employer might claim that you are in ‘breach of covenant’.

Employers are very keen on restrictive covenants, but the clauses can be so draconian that they are not enforceable. We can advise you generally about your contract, and in particular in the following situations:

– Your contract contains a restrictive covenant which seeks to prevent you working for a new employer. Does the restriction have any force?

– You have already moved to a new employer, and would like to contact old customers, or encourage former colleagues to join you. Are you able to do so?

It is important to take advice about a particular set of circumstances. Call us today to discuss your situation and how we can help.

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