Restrictive covenants (or post-termination restrictions) help protect your business by limiting what employees can do when they leave your employment. Our solicitors can help you draft covenants specific to your business and advise on how to enforce them.
Restrictive covenants are a complex area of employment law. Although you need to protect your business interests, you can’t impose unreasonable restrictions on your employees after they’ve left. Our employment team can make sure your restrictions are realistic and fair and stand the best chance of being enforced by a court.
What Are Restrictive Covenants?
Restrictive covenants are used to protect your company’s business interests or confidential information when an employee leaves.
All businesses should have restrictive covenants in place for employees who can access sensitive information like business contacts, financial records and intellectual property. Covenants can also stop employees with highly valued skills working for your competitors straight after they’ve left you. Restrictive covenants usually protect your business for a specified period of time after the employee leaves.
Restrictive covenants should be included in your employees’ employment contracts or service agreements. It’s important to update these covenants when individuals are promoted, change jobs or there is a change in the company.
The most common types of restrictive covenants are:
- Non-competition covenants – these stop employees from working for a competitor or opening their own business that directly competes with yours
- Non-solicitation covenants – these prevent employees from approaching your clients to encourage them to leave your business. In these cases you’ll need to prove the employee approached your clients
- Non-dealing covenants – these stop employees from doing business with your clients, suppliers or existing employees. These are useful because you don’t need to prove an approach was made.
- Non-poaching covenants – these prevent former employees from poaching your employees from you
- Team move covenants – these prevent an employee from employing their former colleagues
- Garden leave clauses – these can give you protection by making an employee stay away from work and have no contact with other employees, clients or targets during their notice period.
- Confidentiality clauses – prevent employees from sharing confidential information while they are employed and, if properly drafted, after they leave.
- Intellectual Property (IP) clauses – these ensure any intellectual property rights created by an employee during their employment automatically belong to your business.
How Are Restrictive Covenants Enforced?
Drafting restrictive covenants involves balancing your business interests with the rights of your staff to make a living elsewhere when they leave your employment. To be enforceable you should ensure that:
- Restrictions are relevant to the position and status of the employee
- The period of time and location of the restrictions are reasonable
- Your employees understand the restrictions and how they’ll be affected if they leave your employment
- You regularly review your restrictions to make sure they stay relevant to individual employees.
How Can Irwin Mitchell Help?
Our employment solicitors can help you with a range of services relating to restrictive covenants, including:
- Drafting restrictive covenants that protect your business and are reasonable for specific staff in your business
- Advising and limiting the risks to your business if you’re hiring teams from another business
- Advising on how to enforce your covenants
- Negotiating situations where new restrictions will be introduced (like when an employee is promoted or if existing covenants are updated)
- Advising on what happens to restrictive covenants under TUPE if you’re transferring staff or taking on new staff in your business
We also offer our IM Protect service that gives you advice in three areas which are:
- Analysing your existing contracts and policies to find any areas where you could be at risk and help you fix them
- Recruitment advice on how to employ people who already have restrictions in place from previous employers
- Advising how to enforce your policies so employees don’t break them when they leave
You’ll have the option to pay for advice in all three areas or just the one you need. See our IM Protect page for more information or contact our team today on 01142 781 629 to find out how we can help you.
Why Choose Irwin Mitchell?
Our employment team includes a range of experienced professionals specialising in employment law. Your business can get help and advice from employment solicitors, barristers and forensic IT specialists. If you need it, we also have expert teams specialising in commercial litigation and intellectual property.
We know that you don’t want to spend a lot on legal fees. We offer pricing options to suit any business from fixed rates charged by the hour, retainer arrangements or a bank of hours purchased upfront at a discounted rate.
We’ve worked with many businesses operating in different industries. We take the time to get to know your business so we can advise you on the best way forward to protect your business with covenants that suit you and your employees.
With teams across the UK we can be on hand to help wherever you’re based. Call our team today on 01142 781 629 or contact us online.
