A major concern for employers is staff turnover and the risk that ex-employees may go to work for a competing business, poaching your staff and customers. It is an area of employment law that is covered by what are known as restrictive covenants or post termination restrictions. Many employers have restrictive covenants in their employees' employment contracts. However, some employers believe that restrictive covenants are unenforceable, or they may have simply copied and pasted a restriction from a different contract. Restrictive covenants are enforceable, provided they are carefully drafted and can be a valuable weapon in your employment law arsenal to prevent unfair competition.
An enforceable restrictive covenant has two purposes:-
- You can seek an injunction against the ex-employee to prevent him being in breach;
- It discourages the employee from looking to breach them.
This note looks at what restrictive covenants can do, how wide they should be, what measures you should think about taking to protect your business.