Restrictive Covenants / Non Compete Clauses

Start with the end in mind!

All businesses & employers recognise the importance of protecting information, staff, relationships, intellectual property and customers. To do so confidentiality clauses and restrictive covenants (or non compete clauses) need to be included with an employment contract. Separate clauses will deal with obligations of employees, during employment and post termination. Ensuring they are enforceable is crucial.

Confidentiality Clauses

If you do not have a confidentiality clause in your contracts, covering post termination, then your employee is free to use that information, save ‘trade secrets’. Without any restrictions in place an employee will also believe they can act freely. Careful wording tailored to your business will help protect you.

Restrictive Covenants

These types of restraint of trade clauses will vary from business to business. They can be and are enforced by the Courts. Simply having them in place can sometimes be deterrent enough.

Typical clauses include:

  • non-compete – to prevent former staff working for a competitor
  • non-solicitation – to prevent former staff from soliciting (actively going after) your customers
  • non-dealing – to prevent former staff dealing with customers (even if they approach them)
  • non-poaching – preventing former staff from poaching your existing ones (usually particular roles or levels of seniority)
  • non-disruption – preventing former staff from disrupting supply chains (for example)

We thought they weren’t enforceable?

Over the last few years Courts have become more supportive of well drafted, reasonable and justified restrictive covenants. A number of factors are taken into account when deciding if to enforce them. This includes determining what ‘legitimate business interest’ is being protected, how well defined the various provisions are and what time frame is imposed. Restrictive covenants are a restraint of trade and, as such, the Courts will only enforce them if they go no further than is necessary to protect the legitimate business interest.

What next? How can we help you.

We regularly draft restrictive covenants. We will to talk about your business and its needs. For example, we will want to understand your business cycles (sales, data) and what need protecting.

If you are concerned about the impact of an exiting employee, we can provide legal advice & practical guidance on what steps you can take immediately and in the long term. This can include ways to avoid a Court hearing or applying for an emergency injunction (to stop something from happening). Please contact us for employment law advice. Your employment solicitor can visit your offices or you can attend ours. We cover Guildford, Godalming & the surrounding area, alongside clients in London. Please give us a call.

To provide some useful information, whilst online, we have employment law checklists available. You can also sign up for regular updates.

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Not sure if your restrictive covenants are enforceable as an employee? Do see here.