Restrictive covenants are the terms in a contract of employment that restrict an employee’s freedom, usually to work for a competitor for a period of months or years after employment has ended.
We regularly come across experienced business people who think that restrictive covenants are unenforceable. Like many myths, there is an element of truth to there. It is correct that the Courts will not enforce contracts that are simply anti-competitive.
However, restrictive covenants are enforceable if they are ‘reasonable and necessary’ to protect the employer’s legitimate interests, such as their confidential information or goodwill in customer relationships that is the result of their business investment.
The key to ensuring effective restrictions are in place is careful drafting appropriate to circumstances of an employer’s business.
You can be confident in our advice and drafting. We are. We have our drafting challenged in Court and upheld, both at temporary injunction proceedings and then in full trial.
If you are concerned that a current or ex-employee may be using your confidential information or breaching restrictive covenants, you should take expert advice without delay. A well drafted and appropriately assertive letter from specialist solicitors may often lead to a short exchange of correspondence that is a sufficient ‘shot across the bows’ to cause the employee and their new employer to capitulate. If correspondence doesn’t work, you need to be prepared to follow through with legal proceedings. Decisions may need to be made quickly and before too much damage is done or time has passed, since the Courts will not bolt the stable door after the horse has bolted.
If you’re not sure that you’ve got effective restrictions in place, or are concerned an employee is breaching their obligations to you, give us a call.