In order to ensure your business is protected when a high profile or senior member of your team leaves, you may wish to incorporate restrictive covenants into their contract of employment.
They can be particularly important when it comes to guarding your legitimate business interests, especially if your ex-employee decides to go and work for one of your competitors.
The employment law solicitors at DBF have plenty of experience in drawing up watertight restrictive covenants that will help safeguard the future of your business if a key member of staff decides to move on from your company.
Types of restrictive covenant
The aim of a restrictive covenant is to restrict your former employee’s activities just enough to stop their subsequent actions from having a negative impact upon your business. The five most common ways to achieve this are:
- Including a confidentiality agreement that stops your former employee from passing on sensitive information or secrets when they leave.
- Preventing your former employee from working in the same sector as your business for a pre-determined time after they leave. This can also include a geographical stipulation that can stop them taking up a position with any local competitors.
- Precluding your former employee from working for or dealing with your current clients.
- Stopping your former employee from taking your clients with them to their new business.
- Restricting your former employee’s ability to take any of your staff with them when they leave – this can be useful if the ex-staff member plans to set up their own rival business.
Are your restrictive covenants enforceable?
In order to ensure your restrictive covenant is enforceable, it must impose restrictions that go no further than is necessary to protect your business interests.
Covenants that are too broad will likely be rejected by the courts on the grounds that they are a restraint of trade. If this happens, you will not be able to do anything to stop your former employee competing against you.
The laws outlining what is and is not enforceable within a restrictive covenant are very complex. As such, it is vital that you work with an experienced employment law solicitor when drawing up your contracts to ensure that everything is in order.