Restrictive covenants can be crucial to protecting the interests of your business.They are essentially clauses that can be added into an employee’s contract to prevent them from behaving in a certain way after their employment has been terminated.
Restrictive covenants can prevent an employee from working in a competing business, taking or contacting clients or customers and even attempting to poach colleagues! So, for example, it may be possible to prevent a departing employee from setting up a similar business down the road, taking colleagues with them and contacting your existing clients or customers.
When courts are considering restrictive covenants, the starting point is that they are void on the grounds of illegality. However, if an employee can prove to the court that the covenants are designed to prevent legitimate business interests and go no further than is reasonably necessary to do so, then the court may uphold the covenants and they may therefore be enforceable.
As restrictive covenants cannot be drafted too widely if they are to be enforceable, it is sensible not to use the same restrictive covenants across the board for all employees. There are certain factors that should be given consideration when restrictive covenants are being drafted. If you need advice or assistance on drafting restrictive covenants then please contact us for a quote.