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Guide to restrictive covenants for employees

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Posted by Susan Hopcraft on 25 June 2020

Susan Hopcraft - Professional Negligence Lawyer
Susan Hopcraft Partner

These are the headline practical things to think about if you want to leave your current position and are worried about restrictions on your activities after you leave. 

We have more detailed articles available, but here are the essentials to think about early on.

Check your current contract of employment or consultancy. 

There might be clauses in your employment contract that limit your ability to compete with your current business for a period.  They might also limit your ability to approach and deal with clients or customers who you have been advising and dealing with.  Sometimes there are restrictions on enticing other staff to leave.  Taking advice early on whether these restrictions are too wide to be enforced is vital as you plan your next move. 

Are there confidentiality provisions in your contract?

Check for confidentiality provisions in your contract but be aware that confidentiality continues after you leave whether in the contract or not.  Take care not to leave any audit trail on your work devices that could raise suspicions over your future activities.  If you are planning a move be aware that your employer will investigate your activity if they become aware that you might have breached any obligations.

How senior are you? 

Consider whether your general duty of employee loyalty is supplemented by a fiduciary duty.  This fiduciary duty, often applied to board directors, would limit further what you can do that might be perceived as damaging to the employer whilst you are employed.  Even consultancy contracts can contain higher levels of loyalty which could mean that planning a team move needs to be done very carefully.

Be careful with social media

After you move, be careful over what evidence is left in the public arena.  LinkedIn and website profiles need to be updated but be careful not to use confidential information there.

Clients that want to follow you

If you are under a non-deal or non-solicit but clients want to deal with you regardless, perhaps because they have been with you for many years, long before you worked for the current business, then ask them to record that in writing.  That could help if you later need to defend a claim.

Threats of injunctive action

If you receive a letter threatening an injunction act quickly.  Injunctions need to be applied for without delay and employers will seek one if they think their business is being damaged. Take legal advice within days.

Potential routes for resolving disputes

What other routes might there be to resolve a dispute that evolves?  Can you ask for a ‘without prejudice’ meeting early to try and reach a settlement and minimise damage to all parties? (‘Without prejudice’ means you what is said can’t later be used in Court.) If tempers are too high, is there an independent mediator or trade association who might help as a go between?  

About the author

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

Susan Hopcraft

Susan is a disputes and professional negligence lawyer, mainly in the financial services sector.

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