Restrictive Covenants

Employers are becoming increasingly concerned to protect confidential information relating to the products and services they provide.

This can be sensitive price information, secret formulations or processes, so understandably they will contractually limit what their employees can do particularly when employment ends.

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. You may lose your new job, see your fledgling business fail at the first hurdle and face a huge legal bill. So, if you are in any doubt at all as to whether your career plans may fall foul of an existing restriction, speak to a member of our team at Ralli before taking any steps.