I have restrictive covenants in my employment contract and I need legal advice

Restrictive covenants are used by employers to protect their business interests. In certain industries, departing employees can pose a risk to their employers when they leave and join a competitor taking their skills and knowledge elsewhere and/or taking clients with them. This can be particularly damaging where an entire team moves to a competitor. Similarly, an employee who sets up a competing business after leaving employment could cause financial loss to his/her previous employer.

The Courts look to strike a balance in this area of the law between protecting an employer’s business and promoting a free market where employees are not prevented from earning a living after employment ends. Restrictive covenants need to be tightly drafted by employers to be enforceable. Restrictive covenants should give employers no more than adequate protection to protect their business interests.

If you are contemplating leaving your existing role to set up your own business or join a competitor it is important to seek advice regarding your restrictive covenants. You should proceed with caution where you have a restrictive covenant which prevents you from poaching customers or colleagues. If you breach your restrictive covenants or your previous employer suspects as much then you (and in some circumstances your new employer) could face the threat of an injunction.

It is important to seek advice at an early stage to minimise the risk of problems arising relating to your move.

We offer a free consultation to qualifying individuals. Please call our confidential enquiry line on 020 7404 9390 or email us. Lines are staffed 24 hours.

How can Vardags help?

If you are prevented from earning a living by a restrictive covenant, it may be that the restrictive covenant in question is unenforceable. We can explore this with you.

There are a range of restrictive covenants that can be used by employers to restrict the activities of employees after employment ends including:

  • Non-compete in certain geographical areas
  • Non-solicitation of customers or clients of your former employer
  • Non-dealing (providing services to customers or clients of your former employer)
  • Non-solicitation of former colleagues

If your employment contract contains a non-compete restriction, this could prevent you from joining a competitor for a defined period following the termination of your employment. The length of the restriction is relevant to reasonableness and enforceability.

If you are concerned about the restrictive covenants in your employment contract or you are being asked to agree to new restrictive covenants by your employer, we can advise you about enforceability and the extent to which you will be restricted on the termination of your employment.

Restrictive covenants will only be enforceable if they protect a legitimate business interest and are viewed as reasonable. There can be disagreement between an employer and employee about this.

For example, when considering the length of a restrictive covenant, consideration needs to be given as to how long it might take a business to consolidate its client base after an employee leaves who had a close relationship with these clients.

The existence of restrictive covenants in your employment contract does not necessarily mean they are enforceable. However, it is not a call that you should get wrong as this could result in a costly and time consuming legal case against you. We have considerable experience helping our clients understand what they can and cannot do on an exit where restrictive covenants could be an issue. We are often able to negotiate a different set of restrictive covenants when an employee leaves their role that are more acceptable to both parties.

If your employer terminates your employment in breach of contract or if you are constructively dismissed, you may no longer be bound by your restrictive covenants. It is highly recommended that you take legal advice, however, to ensure that you are in a strong position to argue that this is the case.

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01865 598 1429
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01962 657268
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