Employment restrictive covenants

Many departing employees have a covenant (i.e. a promise) in their contract of employment to prevent them going to a competitor or being involved with a competing business for a period after they have left their employment. This is particularly the case where employees have high skill levels or work in certain professions. The purpose of the covenant is to protect the existing employer

In a recent case, an employee had worked for her employer since 2003. She gave notice of her intention to leave in early 2017 and was put on so called 'garden leave' i.e. she was sent home and was not required to come into work during her period of paid notice.

The employee wanted to work for a competitor. She had the following clause in her contract of employment: read "[you shall not]…directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which were carried on at the Termination Date or during such period".

The employer was successful in obtaining an injunction which is an order which prevented the employee from going to work for the competitor for 6 months after her contract ended. The employee appealed the decision and was successful. The court decided that in this case, the wording of the covenant in her contract was too widely drafted and was thus void and unenforceable.

It is often fair to say that each case will depend on its own facts and the wording of the particular clauses being considered by the court.

However, employers should be careful to ensure that their restrictive covenants and restraint of trade clauses in employment contracts are not drafted so widely as to render them unenforceable. The covenants should only protect the legitimate interest of the business.

To discuss this or any other employment related matter, contact us.

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