Restrictive Covenant
As employment law specialists, we sometimes get approached by employers who want to have very extensive restrictive covenants. However, restrictive covenants are considered by the courts to be anti-competitive and in restraint of trade. You need to be able to show that you are justified in putting a restraint on your employee and that you have gone no further than is reasonable to protect your legitimate business interests. The concept of reasonableness has been the subject of a number of employment law cases, which allows some principle to be drawn.
In general, the more senior the employee the easier it will be to justify greater protection. When considering the time period of the restraint, the court looks at what the employer is trying to protect. For example, if you are looking to restrain an ex-employee who was a senior sales person, it would depend on what you were selling, how often the sales person had contact with the customers, how long it would take to replace the sales person and rebuild the customer relationship. A senior salesperson who sells stationary where each customer re-orders every three months is unlikely to have a 12 month restriction upheld.
Geographical restrictions must also be reasonable and should be linked to the geographical spread of the ex-employees customers. So, for example, a court held it unreasonable for a solicitor to be prevented from working within a radius of 400 yards of High Holborn, mainly because there were so many law firms operating in that area.
In general, the longer the duration, the wider the scope and the more restrictive the clause used or the wider the geographical area, the harder it is to show the restriction is reasonable. The court will not simply re-write the restriction to then allow a lesser restriction to be enforced. It is therefore a better practice to draft a clause of more modest scope and to get an experienced employment solicitor to review any clause to ensure it fits the circumstances.