A restrictive covenant can be put in a contract of employment to protect your organisation should an employee leave. However, how enforceable restrictive covenants are and whether they are upheld will depend on whether, the covenant protect something specific – a covenant cannot just be put in place to stop an employee from doing any work. Specific and well-drafted covenants which have a reasonable scope and duration are still able to be used and enforced.
In the case of Egon Zehnder Ltd v Tillman , a senior employee in an executive search and selection company had a restrictive covenant in her contract of employment which stopped her from working for a competitor for six months after leaving the company. Plus, there was a covenant preventing her from enticing employees of the company to leave with her. After she resigned to go and work for a competitor, her company was successful in seeking an injunction to stop her from starting work with the competitor for the full six months.
While it was not possible to stop her from ever joining to a competitor, the six month gap meant that her knowledge about work the company was doing was less recent, and that her relationship with customers would have lapsed for six months – giving valuable protection for the company. The period of six months was found to be reasonable in these specific circumstances.
- Consider whether there are any employees whose knowledge could damage your company if they resigned and moved to a competitor.
- If you do have any such employees, take another look at the contractual protection that you currently have in place.
- Check whether covenants need updating after promoting employees.
- Take professional advice about the wording of a restrictive covenant. In order for it to be enforceable, the restrictive covenant must be worded carefully, and it must protect something specific in your business and last only for a period that is necessary for the organisation to be protected.
If you have any questions, please contact Sarah Tahamtani on 0113 336 3314 or via email firstname.lastname@example.org
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