Gardner Leader

Restrictive covenants

It is often said that employees are the biggest asset of any business. But of course as soon as they leave, the chances are they become the biggest asset of someone else’s business and quite possibly of one of your competitors.

Everyone moves on eventually and so it is important for employers to try and ensure that when that key employee does leave, there are provisions in the employee’s contract of employment which limit the damage which he or she can do.

Restrictive covenants will generally try to prohibit the employee from:-

• working for a competitor for a period of time
• setting up a competing business of his or her own
• taking customers away
• taking other employees away

Such provisions have to be very carefully drafted. If they go beyond what is reasonably necessary to protect the legitimate business interests of the employer, they will not be enforceable.

They should also be supported by suitable provisions covering confidentiality and intellectual property rights to ensure that the departing employee cannot simply hand over all your key information to a competitor.

We also advise employers when the need arises to enforce such provisions by issuing court proceedings for injunctions or damages.

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