Restrictive Covenants for Businesses

For employees with key knowledge about pricing and strategy then it may be reasonable to impose a restriction in their contracts which says that when they leave, they cannot work for a competitor.

It must be for no longer than is necessary to protect the legitimate business interests of the business which will generally be the length of time that the information is likely to remain confidential. They are not usually used to protect client details.

To protect customer connections a contract will usually include a ‘non solicitation’ and ‘non dealing’ covenant. They may also prevent the poaching of employees.

These covenants should be tailored towards the business, the employee and their role. A badly drafted restriction will mean that it is unenforceable and if it is for too long, then the court will not rewrite the restriction with another time period, it will simply be unenforceable.

Sometimes an employee wants to move to a competitor and take his customer contacts, sometimes he might be planning to set up against his employer and taking steps to do so whilst still employed. An employee may start to suggest that he is being forced out of his role (‘constructively’ dismissed) to avoid being bound by restrictions.

We are able to advise on all of these situations, often time is of the essence and applications must be made quickly to the High Court.