Restrictive covenants: are you protected?

Recruiting and retaining good staff is a challenge. So, it’s no surprise that your competitors will be keeping an eye on your top talent.

Disputes are on the increase where employees leave to join competitors, with the former employer wanting to take action to protect its business.

An employer can agree with an employee, under the employment contract, various restrictive covenants to protect the business should the employee leave e.g. non-poaching key staff, non solicitation/non dealing with customers, non interference with suppliers – even no working for a competitor.

• there is a legitimate business interest to protect e.g confidential information, trade connections, and
• applied to employees who pose a risk to those interests, and
• restrictions are no wider than necessary to give reasonable protection in terms of duration, geographical scope and who is caught by the restriction.

Planning who should be subject to restrictions/ what restrictions apply gives the employer a better chance of demonstrating that the rationale behind the restrictions is reasonable.

The best time to achieve this is at offer stage. If existing staff pose a risk to your business but have no restrictions/poorly drafted restrictions, this can be addressed. If an employee breaches restrictions post termination, options available are to seek injunctive relief to enforce restrictions and/or damages for loss of profits etc. Be vigilant. Act quickly at the first sign of any potential breach/unlawful behaviour. Take legal advice. Don’t risk everything you have built up as a business by failing to ensure staff are properly restricted.