Restrictive Covenants for Employers

Employers frequently have employees whose role requires them to build relationships with customers and clients and suppliers and colleagues. An employer may want to prevent its former employees (and consultants or workers) from, for example, acting in competition, soliciting customers, dealing with customers, interfering with suppliers, disclosing confidential information or damaging the employer’s intellectual property after the employment ends.

Employers can lawfully protect “legitimate business interests” if it properly does so in the employee’s contract of employment (or consultant’s consultancy agreement).

Restrictive covenants, or post-termination restrictive obligations, are used by employers to protect their own relationships with their customers, clients, suppliers and colleagues in circumstances where the relationship with the employee (consultant or worker) ends.

Where an employer wants to protect its business, it must prepare clear and unambiguous clauses in the employees’ contracts of employment. These contracts should be regularly reviewed to ensure that they are effective and are no more than is necessary to protect the legitimate business interests of the employer. The approach taken by the courts is to try to balance the employers need to protect its business against the former employees need to earn a living so such clauses have to be shown to be reasonable and considered to be enforceable.

If an employer wishes to enforce its restrictive covenants, or an employee is threatened with proceedings for the enforcement of restrictive covenants, it is important that legal advice is obtained as early as possible. Our experienced team regularly advises both employers and employees on restrictive covenants and the enforcement of restrictive covenants.

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