The law around restrictive covenants is complicated and still developing. As your trusted legal advisor with unrivalled expertise in employment law matters, Wilford Smith Solicitors can provide clear, strategic guidance and representation that will safeguard your best interests when drafting restrictive covenant contractual terms or enforcing a restrictive covenant against a former employee.
As a full-service law firm, we will work as a seamless extension of your in-house legal and HR teams, providing extensive legal expertise, support, and guidance. Our solicitors will ensure you can rely on the restrictive covenants in your employment contracts to protect your commercial interests.
The employment solicitors at Wilford Smith have a comprehensive understanding of restrictive covenants and how they may be enforced, meaning we are expertly placed to advise on issues that may arise relating to restrictive covenants in employment contracts, shareholder agreements, settlement agreements, consultancy agreements and business sale agreements amongst many others.
A restrictive covenant is a clause, or a set of clauses, incorporated into an employment contract which seeks to restrict the actions of an employee after their employment has been terminated. Such clauses are also commonly included in director's service agreements. Restrictive covenants aim to protect the employer's commercial interests from the threat of former employees using insight into the confidential business operations gained in their previous role to achieve a commercial advantage in the future.
Technically no. Any contractual term that restricts an employee’s activities after their employment has ended is considered void by the courts for being in restraint of trade and therefore contrary to public policy unless:
• You, as the employer, can prove you have a legitimate proprietary interest that it is right to protect, and
• The protection you seek is no more than reasonable having regard to the interests of the parties and public interest.
To ensure a restrictive covenant is enforceable, it is crucial to have it drafted by an experienced employment law solicitor. Our team will meticulously work to understand your business and industry sector and draft clear, concise restrictive covenants that will stand up to scrutiny.
Restrictive covenants typically fall into the following categories:
• Non-competition - prevents your employee from working for a competitor for a prescribed period following the termination of their employment. This will usually be for six months but can vary between three and 12 months, depending on the seniority of their position.
• Non-solicitation of clients - aims to prevent your employee from having contact with your clients for a prescribed period after their employment has ended. Depending on the employee’s position, this may cover a period between three and 12 months. This will typically take the form of a ‘non-solicitation’ or ‘non-dealing’ clause.
• Non-poaching - prevents your employee from poaching key employees from you after they have left.
If you wish to introduce a new restrictive covenant into an employment contract or amend an existing one, after employment has commenced, you can do so with the consent of your employee. If consent is not given, you have two options:
• Impose the change unilaterally - you can introduce a restrictive covenant without express permission; however, this may result in a claim for constructive dismissal if your employee resigns as a consequence. Your employee may be seen to give implied consent if they do not object to the change.
• Terminate the employee’s contract and offer re-engagement on new terms - this is risky as it may result in a claim for unfair dismissal. However, this might be avoided if you can show that you have a ‘legitimate business interest’ to protect.
Wilford Smith was founded over 30 years ago and is now considered one of the UK’s most prestigious law firms. We have developed a richly deserved reputation for excellence in our core areas of law, including employment and HR. We are more than just a law firm; we are your trusted legal advisor and will be there at every step of your commercial journey. You are never alone. The advice, support, and representation we provide to your business will be tailored to your needs and specific to your industry sector. You can be assured that with our team managing your employment law matters, exceptional outcomes are the norm.
Our employment law teams are based in Sheffield and advise and represent clients throughout England and Wales. Contact us today on 0808 168 5813 to find out how we can help with matters relating to restrictive covenants.
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