Loch Law

Restrictive Covenants Employment Law Solicitors

Home > Loch Law > For Employers (Law) > Restrictive Covenants Employment Law Solicitors

Post-Termination Restrictive Covenants and Employment Contracts

Every organisation has information that is confidential and crucial to the running of its business. Whether it be financial data or client lists, this information can be invaluable to the success of the organisation, and protecting it will be of the utmost importance.

Departing employees are often well-placed to take advantage of confidential information, including strategic plans, customer and client details, and other information about their ex-employer’s business, after the termination of their employment. This is where post-termination restrictive covenants and confidentiality clauses within employment contracts come in handy.

These clauses can:

  • Stop ex-employees using confidential information gained at their old workplace in their new job;
  • Restrict an ex-employee’s ability to start up a business that competes with their ex-employer; and
  • Prevent an ex-employee “poaching” their ex-employer’s business contacts, clients or employees (within a set time frame).

If you’d like to discuss how our specialists can help you solve any restrictive covenant issues relating to employment, click here to request a call back.

 

Protecting your business and your data:

Would you like a free call back from an expert?

Please enable JavaScript in your browser to complete this form.

By submitting this form you are providing us with your personal information. We take great care to look after your personal data safely and securely. You can read full details in our Privacy Information

Enquire now on 0203 667 5400

Our experts are waiting to talk with you and our aim is to respond to all enquiries within 2 hours.

Our award-winning team

How Loch Law can help

We can review and offer expert legal advice on the terms of your existing post-termination restrictive covenants and confidentiality clauses within employment contracts. Alternatively, we can draft new restrictive covenants and/or confidentiality clauses within employment contracts for you to ensure they’re up to date and comply with UK employment law.

We also routinely act on behalf of employers in relation to civil litigation, including injunctive relief applications, negotiating undertakings, enforcing post-termination restrictions, and pursuing damages claims arising from breaches of restrictive covenants.

In the absence of enforceable covenants, we can help you demonstrate and attempt to enforce an ex-employee’s implied duties of fidelity and confidentiality under their contract of employment.

 

Loch Law

Testimonials

I cannot tell you how much I appreciate your help and please let whoever helps you get this out of the door know that I appreciate theirs too!

Loch Law Client

Pam and her team are always on hand to expertly advise us on any employment law issues we have. The speed of their service levels combined with high-quality advice always exceeds our expectations and as a result, we have been a satisfied client of the firm for over 7 years. I would not hesitate to recommend Loch Law to any business.

Operations Director, Professional Services

Thank you so much for your advice. I really appreciate the fact that you were able to understand the nature of our company and tailor your advice accordingly. I think that ability is key in defining a good lawyer. Lawyers who cannot deviate from 100% security are of little use.

Loch Law Client

I cannot recommend Joe Milner at the Tunbridge Wells office highly enough. He was extremely helpful and reassuring and settled my claim quickly and efficiently. What a delightful chap to do business with.

Loch Law Client

The expertise of Loch Law made me feel in very safe hands. Caroline was thorough at explaining the legal situation, giving clear advice and was committed to getting me a fair outcome.

Senior Professional

Thank you so much for your work; it is greatly appreciated. I can’t wait to get this situation resolved! Thank you again. We would be lost without you.

Loch Law Client

It goes without saying my contacting you at the outset & getting your great advice gave me confidence through this upsetting episode.

Loch Law Client

The expertise of Loch Law made me feel in very safe hands. Caroline was thorough in explaining the legal situation, giving clear advice and was committed to getting me a fair outcome

Senior Professional

The speed of their service levels combined with high quality advice always exceeds our expectations and as a result we have been a satisfied client of the firm for over 7 years. I would not hesitate to recommend Loch Law to any business.

Operations Director, Professional Services

We have been incredibly thankful for having your support over the last few years and our clients have been very impressed with the help they have received from Pam Loch and the rest of the team. We cannot praise you highly enough.

Loch Law Client

I cannot recommend Joe Milner at the Tunbridge Wells office highly enough. He was extremely helpful and reassuring, and settled my claim quickly and efficiently. What a delightful chap to do business with.

Loch Law Client

Are there any legal restrictions for the employer?

Employees may argue that post-termination restrictions are void on the basis they are a restraint of trade, namely they prevent the employee working or carrying out their trade. They might also argue a restriction is too wide or doesn’t actually protect a legitimate interest. In the event of a dispute between the parties, the courts are often required to adjudicate on the enforceability of particular covenants.

Carefully drafted covenants are therefore essential. To give an employer the best chance of being able to rely on its restrictive covenants, it must be able to show that they are designed to protect the legitimate business interests of the organisation and go no further than is reasonable to protect those interests.

Restrictive covenants having the sole aim of preventing competition will not generally be upheld by the courts. A non-compete restriction must be designed to protect anemployer’s confidential information, trade secrets or customer connections, and prevent an employee from obtaining an unfair advantage by exploiting these for their own, or another employer’s, benefit.

Non-solicitation clauses are therefore looked on more favourably than pure non-compete clauses.

Flexi-Retainer

Our flexi-retainer provides access to commercial and bespoke HR and legal solutions. The benefits of a retainer package include:

 

  • An affordable way for businesses to access all of Loch Law’s services;
  • If the services aren’t needed for a month, the time allocation rolls over to the next;
  • Based on a fixed monthly fee, which allows you to manage finances, but also have the flexibility to buy in other services when you need them;
  • Pick a package which suits your needs now, and move onto another arrangement at any time.

What interests can an employer protect?

As mentioned above, restrictive covenants that have the sole aim of preventing competition are generally unenforceable. However, it is well recognised that restrictive covenants can be used by an employer to protect the following legitimate business interests (amongst others):

  • Trade connections – an employer can protect its connections with its customers, clients or suppliers. This is the basis for most ‘non-solicitation’ covenants.
  • Trade secrets and confidential information – an employer can protect its trade secrets and confidential information. In this context, the courts have previously recognised that it can be legitimate to stop employees working for competitors in order to protect confidential information, even if the employee is also bound by contractual confidentiality restrictions.
  • Stability of the workforce – an employer has a legitimate interest in maintaining a stable workforce. This can be used to justify clauses restricting ex-employees from poaching and/or employing their ex-employer’s staff.

 

What can an employer do if an employee breaches their restrictive covenants?

If an employee breaches binding restrictive covenants, they can be required to pay damages to their ex-employer. The employer can also seek an injunction to prevent further breaches or to require the employee to take specified actions (e.g. delivering up and/or destroying confidential information in their possession).

The employer may also consider taking action against any new employer of the employee. They will only be able to do this in certain circumstances (e.g. where the new employer induced the employee to breach their covenants), but this route can be attractive given the new employer is likely to have deeper pockets than the employee.

 

What can a restrictive covenant achieve for my business?

When it comes to reviewing what a restrictive covenant - in relation to employment law - can achieve for your business, start by considering what you want to protect and what risks a departing employee might pose. For example, an ex-manager might have a strong influence over the staff they once managed and this might create a risk they’ll be able to poach those staff, to the detriment of your operation.

Once you know what you want to protect and the risks that exist, you can ensure your covenants are specifically drafted and stand a good chance of being upheld.

 

What counts as reasonable?

In order to be reasonable, the level of protection provided by a restrictive covenant should be tailored to what is appropriate for the specific employee and the business in which they operate. In general this means the restriction should be limited in scope, duration and, sometimes, geography. In relation to scope, it is helpful to limit non-solicitation covenants to clients or customers with whom the outgoing employee dealt, rather than applying a blanket restriction. Similarly, in relation to non-poaching covenants, it is sensible to limit them to employees with whom the outgoing employee worked or a certain identifiable category of employees, rather than restricting the solicitation of any and all employees. Duration can be a contentious area. As a general rule we find that a restriction which exceeds one year is likely to be considered unenforceable. When thinking about the geographical extent of a restriction, it is important to bear in mind the relationship between the interest to be protected and the activities of the employee. For instance, if the restriction is designed to protect the business’s customer base and the employee solely operated on a local level, it will be difficult to justify a restriction that goes further than that local area.

What can an employer do if an employee breaches their restrictive covenants?

If an employee breaches binding restrictive covenants, they can be required to pay damages to their ex-employer. The employer can also seek an injunction to prevent further breaches or to require the employee to take specified actions (e.g. delivering up and/or destroying confidential information in their possession). The employer may also consider taking action against any new employer of the employee. They will only be able to do this in certain circumstances (e.g. where the new employer induced the employee to breach their covenants), but this route can be attractive given the new employer is likely to have deeper pockets than the employee. As experienced providers of clear, easy-to-understand legal advice, our team will be more than happy to discuss how they can help you. For more information, click here to request a call back.

Enquire now on 0203 667 5400

Our experts are waiting to talk with you and our aim is to respond to all enquiries within 2 hours.

Latest News, Advice & Newsletters

Statutory Rates 2023/24

Statutory Rates 2023/24

Compensation Limits Award From 6 April 2023 From 6 April 2024 Maximum compensatory award in relation to a claim for unfair dismissal...

read more

Loch Law – Business and Employment Law

Employment Law for Employers

A range of Law services for employers, ideal for both existing employers and new start-ups.

 

> Find out more

Employment Law for Employees

Employment Law and advice for employees, we cah help you and provide guidance.

 

> Find out more

Business Law

Loch Law provides advice and guidence for businesses.

 

> Find out more