Employers quite often incorporate post-termination obligations into a contract of employment whereby the employee agrees not to do certain things after they leave the company.
There are generally four types of restriction. These obligations are set out in a restrictive covenant.
This seeks to prevent an ex-employee from directly competing or working for a competitor, normally within a specific area and for a set period, usually six to twelve months.
This seeks to prevent an ex-employee from approaching existing customers for a set period, usually six to twelve months.
Non-poaching of fellow work colleagues.
This seeks to prevent an ex-employee from recruiting former work colleagues for their new employer for a set period, usually six to twelve months.
A restriction on the use of confidential company information.
This seeks to prohibit the use of any confidential information acquired by the employee during their employment
Restrictive covenants can work to protect an employer’s business. They can provide leverage or influence even if an employer would rather not pursue the matter to a full court hearing or seek an application for an injunction.
On the one hand, employers wish to protect their business interests, but on the other hand, an employee has a right to earn a living, so any restrictions have to be seen as reasonable to prevent any suggestions of a restraint of trade.
The covenant needs to be reasonable to stand a chance of being enforceable and should be outlined to a potential new employee prior to commencement rather than being suddenly introduced after commencement of employment.
An employee should as well be reminded of the restrictions in place prior to leaving at their exit interview.
It is a fine balance but a carefully worded document that is not unreasonable can be worth the paper that it is written on.
If in any doubt please seek professional advice.
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