This article was written by Kevin Poulter, Employment Partner, at national law firm Freeths.
Losing a long-standing employee is something many owners fear but must prepare for as it can have a serious impact on your business’ revenue, reputation and market share.
Therefore, it is important to take steps to protect your legitimate business interests and prevent unfair competition from former employees.
One of the most effective ways to do this is to include post-employment restrictions in the contract of your employees from the very start.
Any restriction should only last for as long as it takes for your legitimate business interests to cease being at risk
These are clauses that limit what ex-employees can do after they leave, such as working for a competitor, soliciting or dealing with your customers, or sharing valuable and confidential commercial information.
However, post-employment restrictions are not a one-size-fits-all solution.
They need to be carefully drafted, be relevant to the employee’s role and be agreed upon by both parties – and ideally before the employment starts.
What restrictions can I include?
The critical element is reasonableness because only where a restriction is proportionate to protect your business interests will they be enforced by a court.
They cannot be used as a penalty on a former employee.
Reasonableness depends on various factors, such as the nature of the business, role and seniority of the employee, length of the restriction and geographical area covered.
There are also different types of restrictions that employees may need to agree to while in employment in order to protect your business.
These include restrictions on