In a highly competitive and increasingly global environment, it is essential that you protect your trade secrets and goodwill. The starting point for this is to ensure that you have effective restrictive covenants in your contracts of employment to prevent the poaching of staff and customers, and the disclosure of confidential information.
We can help you to draft the clauses that will best protect your business, as well as how to implement them during an employee’s current employment if their role changes. Should a breach occur we can advise on the most effective method of enforcement, the action to be taken.
Restrictive Covenants Explained
A Restrictive Covenant is inserted into an employment contract by a business or institution in an attempt to limit what someone can say or do in the event they should quit or be let go. These restrictions are designed to protect the company or institution and typically take one of the following forms:
- A non-compete covenant: Also known as a non-competition covenant or no-compete clause this type of covenant forbids the now former employee from going to work for the competition.
- A non-solicitation covenant: This stipulates that the now former employee shall not seek employment from clients and in some cases manufacturers of their former employer.
- A non-dealing covenant: This is a more restrictive form of the non-solicitation covenant that prevents the former employee from taking work with a competitor, client, manufacturer or supplier even if they were approached by one of those parties.
- A non-disparagement covenant: This states that the ex-employee will not make any negative public statements about the company, its products or services, or its leadership team.
- A non-poaching covenant: This type of clause stipulates that an ex-employee may not recruit their former colleagues to also leave the employer and come work with them.
Challenging a Restrictive Covenant
If constructed wisely restrictive covenants are usually easy for the employer to defend. However, there are limits on restrictive covenants and the court will only side with the employer if they can demonstrate the covenant serves a legitimate interest and that said restrictions are not unreasonably broad or open-ended.
For example: a non-compete covenant that stipulates a former employee may not work with any competitor in the UK and Europe for a period of 5 years will likely be overturned due to it being unreasonably lengthy and broad in scope. On the other hand, if the non-compete covenant stipulates only that the ex-employee shall not work for a UK competitor for 1 year it may well be upheld by the court.
Why Choose Frederick Solicitors?
Restrictive covenants are essential in order to protect trade secrets and brand integrity and to prevent top talent from being siphoned away by aggressive competitors. The key to ensuring your restrictive covenants are defensible is making sure they are carefully composed by someone with comprehensive knowledge of the issues involved.
At Frederick Solicitors our extensive experience with restrictive covenant disputes means we understand exactly what is needed to protect your vital interests and, just as important, we know what will stand up in court and what will not.