RESTRICTIVE COVENANTS - UK EMPLOYMENT SOLICITORS

A restrictive covenant is an agreement an employee makes not to engage in certain activities after that employee no longer works for that organisation. Employment contracts frequently include restrictive covenants. Employers like restrictive covenants because it helps to protect their business interests.

Issues covered by restrictive covenants include competing with the employer, soliciting the employer’s customers, using or disclosing confidential information and attempting to lure away fellow employees. Courts in general do not look upon restrictive covenants favourably because they interfere with free enterprise. In order to be legally enforceable, Courts require restrictive covenants to meet certain requirements.

SOLICITORS HELPLINE 0844 332 0018

There are four main categories of restrictive covenants: non-solicitation, non-compete, maintaining confidentiality of sensitive information about the business and non-poaching of employees. Each of the four types of restrictive covenants are used to protect a specific business interest :-

• Non-solicitation: This type of covenant sets forth a specific time period during which the former employee may not engage in any business dealings with their former employer’s customers.
• Non-compete: The employee is forbidden from competing directly with their former employer or working for one of the former employer’s competitors.
• Restriction on the use of confidential information: The employee may not use or disclose trade secrets or other sensitive information about the business.
• Non-poaching of employees: A non-poaching covenant sets forth a time period during which the former may not attempt to get his former colleagues to work for him.

SOLICITORS HELPLINE 0844 332 0018

Courts are wary of restrictive covenants because they limit an individual’s capacity for making a living. Plus, the employer has more bargaining power than the employee. Restrictive covenants are also seen as anti-competitive, which Courts dislike because the public benefits from competition amongst businesses.

Because of these concerns, courts carefully scrutinise the restrictive covenants brought before them. There are two main requirements for an enforceable restrictive covenant. One, it must protect a legitimate business interest. Two, it must only restrict the employee to the extent that is reasonably necessary to protect the business interest.

Whether or not a restrictive covenant is reasonable is determined by the Courts by evaluating whether it is reasonable in each of these areas :-

• duration
• geographic limitations
• scope
• the employee’s seniority

If the restrictive covenant is deemed to unreasonably exceed even one of these areas, it is unenforceable. While evaluating the reasonableness of the restrictive covenant, the Court will also take into account the type of business in which the employer is engaged.

SOLICITORS HELPLINE 0844 332 0018

If an employer wrongfully dismisses an employee, then that employer may lose their right to enforce the restrictive covenant. Wrongfully dismissing an employee is a violation of the terms of the employment contract, which means that even a valid restrictive covenant will not be enforced.

SOLICITORS HELPLINE 0844 332 0018

Contact us today for free legal advice on restrictive covenants and your employment rights. Simply phone our helpline or email our offices to receive a complementary consultation with an expert employment law solicitor.

SOLICITORS HELPLINE 0844 332 0018