As an employer, there will be times when you need to take steps to protect your interests and limit the action that an employee or former employee can take. Restrictive covenants can be used in employment contracts and settlement agreements to prevent employees from engaging in behaviour that could be damaging to your organisation, such as poaching clients, customers, or employees.
At Ashtons HR, we provide advice and representation designed to safeguard your business and ensure that you have the security you need. We will take the time to understand your organisation and the way that you operate, then work with you to put robust restrictive covenants in place. Where necessary, we can represent you in restrictive covenant disputes and take enforcement action.
Our employment law solicitors are highly experienced specialists with the expertise to provide watertight restrictive covenant employment contracts and settlement agreements. We have been helping local businesses for many years and have the in-depth legal knowledge necessary to ensure your enterprise is protected from action that could undermine or harm it.
Contact our restrictive covenants solicitors today
If you need advice on putting effective employment contract or post-termination restrictions in place or making a restrictive covenant agreement with an employee, contact our restrictive covenants solicitors today and we will be happy to help. We have offices in Bury St Edmunds, Cambridge, Ipswich, Norwich and Leeds.
When you work with us, we can provide HR consultancy support, as well as legal advice and representation, depending on your needs.
The types of restrictive covenants
Restrictive covenants will be tailored to the needs of your business and the protection you require. They can be included in a range of documents, including:
- Employment contracts
- Employee handbooks
- Workplace policies
- Settlement agreements
The main types of restrictive covenants used by employers are:
Non-compete covenants
A non-compete clause aims to stop an employee from setting up in competition or joining a competitor’s business. However, a non-compete clause must only go as far as is reasonably necessary to protect your business interests, or it will not be enforceable.
This means that if a non-compete clause is too widely drafted, for example, it prohibits an employee for working for a competitor for a lengthy period of time or in a place geographically distant, the courts are unlikely to enforce it.
Non-solicitation covenants
Non-solicitation clauses prevent an employee from approaching clients or customers with a view to taking them to the employee’s place of work. This clause will usually cover clients or customers an employee has had recent dealings with over the previous year.
Non-poaching covenants
Non-poaching covenants are intended to stop an employee from taking other staff members with them when they leave or approaching them after leaving to encourage them to go too. This type of clause can be restricted to key employees or, in a small organisation, extended to all employees. The restrictive covenant will again need to be limited in time in order to be reasonable and capable of enforcement.
Non-dealing covenants
A non-dealing covenant can restrict employees from doing business with a range of individuals and organisations, including suppliers, clients and existing employees. This type of clause does not require the employer to prove that the ex-employee actively approached anyone, but it may be necessary to show that the dealing could result in a loss to your business.
Confidentiality clauses
Confidentiality clauses seek to protect a range of information relating to a business, such as trade secrets, business processes, research and development information, client or customer identities, supplier identities, marketing information and the existence or terms of a settlement agreement.
Intellectual property clauses
Clauses relating to intellectual property (IP) created by an employee can prevent the employee from claiming ownership of the IP or exploiting the IP for their own gain, and ensure that as the employer, you are able to use the IP yourself in the way that you want.
Why choose our restrictive covenants solicitors?
Our employment specialists have many years of experience in protecting business interests. This is a complex area of law, and if restrictive covenants are not carefully drafted, it is common for the courts to decline to enforce them on the basis that they are too wide.
Our restrictive covenant lawyers are commercially astute and will work to gain a good understanding of your enterprise, identify any potential risks and take the steps necessary to protect it. We have the expertise to draft clauses that will safeguard your organisation while also being enforceable if tested in the courts.
Restrictive covenants fees for employers
Our fees for restrictive covenants work will be based on the amount of assistance required, which we will discuss with you at the outset, providing an accurate quote for the work needed. We offer a high level of expertise and an outstanding service at a competitive rate. If you would like to discuss costs of restrictive covenant employment contracts, restrictive covenants enforcement or other work relating to post-termination restrictions, call us today and we will be happy to answer your questions.
Frequently asked questions about restrictive covenants claims
What are restrictive covenants?
Restrictive covenants are legally binding clauses in an agreement that limit one party’s actions in some way to protect the other party’s interests. They are particularly useful when an employee leaves and are always included in a settlement agreement.
Restrictive covenants in employment law are imposed by the employer for the benefit of their business interests. Without restrictive covenants, employees could potentially damage an employer’s organisation, including by taking clients, customers or workers or by revealing sensitive information.
How are restrictive covenants administered?
As an employer, you have the right to rely on restrictive covenants agreed upon by your employees. This could be covenants contained within their employment contract, in a settlement agreement or in other binding documentation relating to their employment.
To be enforceable, a restrictive covenant must:
- Be intended to protect your legitimate business interests; and
- Be reasonable and extend no further than is reasonably necessary to protect those interests
When drafting restrictive covenants, they should ideally be as narrow as possible to give them a strong chance of being enforceable.
Non-compete clauses can be harder to rely on as some other covenants as the courts dislike restrictions that prevent individuals from taking up other jobs. A judge will look at issues such as how wide any geographical restriction is in relation to the size and type of business you are aiming to protect and whether the period of time is reasonable. For example, for a relatively common business, it would not be reasonable to have a large geographical exclusion zone. Generally speaking, a restrictive covenant will last for six to twelve months. A longer period will need to be justified.
Who enforces restrictive covenants?
If an employee breaches the terms of a restrictive covenant, you have the right to seek enforcement. The first step in dealing with restrictive covenant disputes is to speak to an employment lawyer who will be able to talk through what you can expect to achieve and negotiate on your behalf to try and resolve matters without the need for legal action.
Litigation for breach of restrictive covenants is heard by the courts and not by an employment tribunal. Potential remedies include:
- An injunction preventing the employee from continuing the breach
- A requirement by the court that the employee undertakes to stop the breach
- Damages if you have sustained a loss as a result of the breach
It may also be possible to take action against another party if they have been instrumental in the breach. For example, a new employer may have encouraged the employee to breach the restrictive covenants. If they have, the new employer may indemnify the employee in respect of costs and damages. This means that if you win your case and are awarded costs and damages, you have a strong chance of collecting them.
If you have questions about restrictive covenants employment law or restrictive covenants employee rights in the UK, contact us today.
For more information on our related services, see our employment contracts and HR policies page.
Contact our restrictive covenants solicitors today
If you need advice in respect of restrictive covenants law, we will be pleased to give you the help you need. To speak to an expert restrictive covenants solicitor, contact our offices in Bury St Edmunds, Cambridge, Ipswich, Norwich and Leeds.
When you work with us, we can provide HR consultancy support, as well as legal advice and representation, depending on your needs.