Restrictive Covenants in Employment Contracts
Often employers choose to include restrictions within their employment contracts. Restrictive covenants in employment contracts stop you, as an employee, from doing specific things once your employment has been terminated.
As a specialist in employment law, our team at JLJ legal can advise you on your employment contract and any restrictive covenants outlined within it.
Book your first 30 minute consultation with our team to discuss your next steps.
What is a restrictive covenant?
Restrictive covenants are a clause within an employment contract which prohibit an employee from doing certain things during their employment and for a specific period of time afterwards, such as working for a competitor.
There are different types of restrictive covenants, including:
Non-compete – this prevents an employee from working for an ex-employer’s competitor.
Non-solicitation – this prevents an employee from poaching and enticing away clients, customers and certain employees from the ex-employer - or taking other positive steps to do so - for the purposes of competing with the ex-employer’s business. It usually includes potential clients too.
Non-dealing – this prevents any uncertainty re non-solicitation and means that the employee cannot accept work off clients/potential clients in a competing business, even if there was no poaching or positive action to get the work.
Team Employees – there can also be extra restrictions in respect of someone who was the employee’s direct colleague.
The extent of restriction may also be relative to an employee’s position of seniority in the company; there are usually additional or longer restrictions for a senior member of staff leaving the company in comparison to a junior member.
When are restrictive covenants enforceable?
Restrictive covenants are enforceable if an employer is able to prove that these restrictions are reasonable and necessary to protect their legitimate business interests, for a period of time no longer than is required to protect these interests.
If it is alleged that you have breached your restrictions, your ex-employee may litigate against you in the Court which can be very costly and stressful.
However, a restriction must not be so wide or over the top as deny an employee the right to make a living in their chosen profession and there are a number of other circumstances where restrictive covenants may not be enforceable, such as in instances of constructive unfair dismissal.
How can JLJ legal help you with the restrictive covenants in your employment contract?
We will always advise you on your employment contract and on the best course of action to take if there are any concerns.
We can advise you on the wording and interpretation of the restrictions either before you sign your employment contract or after you leave. It is usually easier to negotiate more reasonable restrictions before you sign, than after the contract has been signed, and you want to breach the terms.
If your ex-employer believes you have breached your restrictions, they may require you to sign undertakings. We can advise you on the undertakings and, depending on the circumstances, can negotiate the terms.
If your ex-employee is seeking an injunction against you in the Court as a result of an alleged breach of restrictions, we can defend you in the proceedings.
We can also negotiate restrictions as part of any exit package.
If you are planning on ending your employment contract and moving jobs, you will need to consider any restrictive covenants within your contract. Contact us today for more information and guidance.