Breaches of Restrictive Covenant & Confidential Information

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Putting protection in place

Protecting a business from unfair competition from departing employees is probably one of the most valuable exercises that can be undertaken. You may be a start-up business or an established business but either way you will have invested time, money and effort into making your business a success. When one of your employees leaves that last thing you want is for them is to join your main competitor or to take your customer list or service or product ‘know how’ to a competitor which could seriously impact your bottom line.

To prevent this you can include what are called ‘restrictive covenants’ in your employment contracts or stand alone ‘business protection agreements’. Typical restrictive covenants include:-

Non-solicitation – your former employee cannot solicit your customers for work;
Non-dealing – your former employee cannot deal with your customers;
Non-compete – your former employee cannot join a competitor or set up a competing business themseleves;
Non-poaching – your former employee cannot poach your other staff to join them at a new employer

These restrictions can generally last for 3-6 months but in some cases can be expressed as lasting for 12 months.

Alongside restrictive covenants is the ability to protect your businesses confidential information such as customer lists, price lists, product specifications, manufacturing processes etc. Appropriate clauses in the employment contract can prevent employees from taking or divulging such information for their own benefit e.g. to a new employer.

If an employee has left and is deliberately breaching restrictive covenants in their contract or abusing confidential information then it may be possible to get an injunction to prevent them from doing this. But in the first instance, it is appropriate to send warning letters which set out the breach and threaten them with further legal action unless they agree to ‘cease and desist’ further breaches by signing a document called a legal undertaking.

Taking action

I can advise you on this or prepare the necessary warning letters. If your former employee fails to heed the warnings then I can put you in touch with an appropriate Solicitor to seek an injunction on your behalf.

Contact

If you would like to arrange a free initial telephone consultation, please do not hesitate to contact me on 0113 871 5909, 07518 256075 or by email at andrew@lightburnlegal.co.uk.

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