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Restrictive Covenants

Employers are becoming increasingly concerned to protect confidential information relating to the products and services they provide. Businesses are particularly vulnerable throughout the current economic downturn as many businesses find themselves facing financial difficulties. Confidential information can include sensitive price information, secret formulations or processes, so understandably many businesses will want to protect this by contractually limiting what their employees can do, particularly when employment ends.

Businesses are relying more and more on technology and employers may find that more staff have access to such information. If an employee leaves, on good or bad terms, employers may believe that there is a risk that the employee may take that information with them, using it in their work for a competitor or to set up in business on their own.

The courts permit employers to place limited restrictions in this area. Such restrictions must be reasonable, and in the protection of a legitimate business interest. In almost all cases, the restrictions will take the form of clauses in a written contract of employment (or service agreement) known as ‘restrictive covenants’.

For a limited period of time after leaving the employment, the employee may be prevented from contacting the employer's customers, having business dealings with those customers or even working in a competing business.

Breach of restrictive covenants can prove very costly indeed for employees. Your previous employer may be able to obtain an injunction against you to prevent you from using such information. You may lose your new job, see your fledgling business fail at the first hurdle and face a huge legal bill. Our experienced employment solicitors can advise you as to the extent of any restrictive covenants in your contract of employment and whether those restrictions as likely to be enforceable by the courts. Our employment solicitors also have experience defending injunctions against employees which have been brought against them by their former employers.