Restraint of trade (or restrictive) clauses are often included in a contract of employment in order to protect the confidential information employees may gain during their employment and restrict what an employee may do with that information once they leave employment.
For restraint of trade clauses to be enforceable you, the employer, must be able to show that:
- The protection you seek is reasonable; and
- It is no more than is necessary to protect your business.
The term 'reasonableness' is assessed by Tribunals against a number of criteria that include:
- Length of the restraining clause
- Geographical spread of exclusion, e.g. within 3 miles of the place of work or throughout the UK
- The kinds of activity which are prevented, e.g. setting up a new office, working for a competitor, poaching staff
- The position and status of the employee
- The nature of the employment
An employee is leaving to work for our competitor; they have a 2-month notice period however they have access to a large amount of Company information. Do they have to work their notice?
It is quite commonplace in these situations for employees to be put on 'garden leave' for the period of their notice. By taking this approach it helps reduce any further insight into commercially sensitive data and reduces the employee's client contact during this period.
I have been made aware that an ex-employee is breaking their contract, by contacting our current customers. What can we do?
An employer can enforce a restrictive covenant preventing a departing employee from soliciting the business of anyone, for example, who had been a customer during the last six months of his or her employment and with whom they had dealt at any time during the course of their employment. If you have a signed copy of the contract that includes a restraint of trade clause then you may wish to seek advice on enforcing the clause.
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