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Business protection: can I really stop an ex-employee working for a competitor?

I’ve had a number of new clients, whose key employees are leaving them, say to me recently “but I can’t stop them working for a competitor, can I?”

Often the answer is no.  But not because it’s something that wouldn’t be possible legally. It’s usually because they haven’t got their key employees signed up to the necessary restrictions ahead of them leaving. Generally that leaves the employer powerless, wishing they’d got their house in order before they saw the pound signs walking out the door!

There’s a tension in the law in this area, between preventing someone from earning a living, and a company’s right to protect the business interests. Early in my career I was lucky enough to be involved in a case for a well-known vacuum cleaner manufacturer, which demonstrated just how far reaching (and long lasting) a restriction on a departing employee can be. You can read about it here

In that case we successfully enforced a 12 month worldwide restriction on the employee working for a competitor. It’s still one of the most comprehensive I’ve seen. The take away message is that it is actually possible to enforce these types of restrictions!

The winning formula in these situations is a well drafted and carefully tailored set of restrictions in the employee’s contract. This means that the restrictions go no further than is reasonably necessary to protect the legitimate business interest and the court will often be happy to enforce them.

The reality is that a lot of smaller / SME businesses might not have the budget to enforce these types of restrictions but if they’re well drafted they may not need to!  Simply drafting them correctly may be enough of a deterrent to prevent your employees from taking the chance!

It’s worth making sure your contracts include the necessary restrictions and that if they haven’t been reviewed for a while, that they still fit the role the employee is currently carrying out.

You can find more information on our Business Protection services here.

Posted on May 27, 2015

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