How can you use restrictive covenants to protect your business?
The need for employers to put restrictive covenants in place hit the news as a recruitment agency closed after a former employee reportedly stole clients to launch their own firm.
The former employee was said to have forwarded the details of 500 clients to his personal email address before leaving the company to set up a rival recruitment agency less than 2 miles away.
Drafting restrictive covenants in employment contracts
Restrictive covenants are often used by employers to avoid such circumstances occurring and affecting the operation of a business.
However, many employers are either unsure what a restrictive covenant can cover or unaware that they may not be able to enforce the restrictive covenants they have in place.
In our latest article, our expert employment solicitors at LawforEmployers take a look at 5 top tips to follow when introducing restrictive covenants.
Know what business interests you are protecting
For restrictive covenants to be enforceable, you will need to be able to demonstrate that they go no further than is necessary to protect legitimate business interests. This could include protecting confidential information, client relationships and other employees.
You should have a clear idea of what you are hoping to achieve by restricting an employee’s activity once they have left your company. Having this information will help you to draft the initial covenants and allow you to deal with any allegations that they go further than is reasonably necessary.
Consider the duration and scope
You should not simply assume that the longer a restrictive covenant the stronger it is. If the restrictive covenant is determined to be too long it will become unenforceable.
Aim to set a reasonable length of time which allows you to protect your client relationships or confidential information. Consider the region that you need to protect your interest in. Setting restrictions outside of this can lead to the covenants being unenforceable.
Take the employee’s role into account
The employee’s responsibilities, experience and position within the company should all be considered when drafting restrictive covenants.
Their relationships with third parties including suppliers or clients will also have an effect on the scope of the restrictions you put in place.
Keep your restrictive covenants under review
When an employee is promoted within a company, reviewing restrictive covenants is often overlooked.
Especially where there is a change in the amount of confidential information an employee is privy to, a change in the terms of restrictive covenant is likely to be required.
Speak to a solicitor to ensure covenants are adequately drafted
It is vital that your restrictive covenants are properly worded to ensure that they offer the right protection to an employer.
By speaking to a solicitor, you can be confident that any restrictive covenants fully protect your business.
Contact the specialist solicitors at LawforEmployers today
By contacting LawforEmployers, you can talk directly to a specialist employment solicitor about the needs of your business. We will help you draft restrictive covenants that provide the protection you need whilst also consider the stance of the Courts in recent case law.
To speak to a dedicated employment law solicitor today, call us on 01282 695 400.
Or, simply complete our quick online contact form and we will be in touch with you as soon as possible.