Business Protection Clauses

Employers are entitled to protect their legitimate business interests with clauses which seek to prevent an employee working for a competitor, setting up on their own, stealing customers, dealing with customers or poaching staff.

The reason for these restrictions is that the employer may have a lot of knowledge and information of certain customers, contracts, or ways of doing things that are incredibly valuable to the business. The restrictions can be enforced during and after the employee’s employment.

Employers may wish to consider garden leave in order to enforce such restrictions while the employee is still employed. Garden leave is a period of time, whilst the employee is still employed and usually in their notice period where the employee remains bound by the employment contract but is prevented from attending work. However, restrictions can also be enforceable for a period of time after the employment ends.

While it is ultimately up to a court to decide if such a restriction can be enforced, there are other benefits of having express provisions in place. These include:

  1. Restrictions acting as a deterrent, meaning the employee will be put off stealing business from the employer after termination
  2. Providing leverage if there is an issue following the end of the employee’s employment
  3. Putting employees off working with competitors and may prevent competitors from hiring your employees

Remember that it is unlikely these types of restrictions will be enforceable if the employer is in serious breach of the contract of employment.

Our team are experts at drafting such clauses for employers, and provide advice and guidance around the meaning and enforceability of existing clauses for potential future employees.

FAQs

What is a Business Protection Clause?

Business Protection Clauses are included in contracts of employment to prohibit an employee poaching staff, stealing customers, working for a competitor or starting up on their own. This is usually for a certain period after termination of employment. These clauses help a business protect the businesses best interests.

What are the benefits of having Business Protection Clauses?

Businesses that use protection clauses benefit in a number of ways beyond simply stopping employees from acting against their best interests, by having such restrictions in place, employees are always deterred, competitors are far less likely to come after staff and there is plenty of leverage if anything does go wrong.

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