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Restrictive Covenants/Restraint of Trade

Employers are entitled to protect their legitimate business interests and this may include seeking to prevent an employee working for a competitor, setting up on their own, stealing customers, dealing with customers or poaching staff.

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

An employer may wish to consider garden leave in order to enforce such restrictions whilst 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.

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 may act as a deterrent meaning the employee will be put off stealing business from the employer after termination;
  2. They may provide leverage if there is an issue following the end of the employee’s employment;
  3. They may put employees off working with competitors and may prevent competitors employing your employees.

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

We are able to draft such clauses for employers and provide advice about the meaning and enforceability of existing clauses for potential future employees.

 
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