Restricting Employees

How carefully have you considered your business’s contracts of employment? These can be an important way of protecting your business against unfair competition. Provided they are drafted concisely and accurately, post-termination restrictions in contracts of employment can protect your business from the actions of ex-employees by preventing them from:

“poaching” your remaining staff;
soliciting business from your clients and customers and prospective clients and customers, where the ex-employee had contact with them during his/her employment with your business;
setting up business in competition within a specified distance of your business’s catchment area.

To be enforceable, such restrictions must be reasonable and necessary to protect a legitimate business interest. If an ex-employee breaches these restrictions, the employer may seek an injunction against their actions and/or bring a claim for damages. It is also possible for an employer to bring an action against the ex-employee’s new employer if it can be found to have induced the ex-employee to breach the terms of their contract of employment.

Such commercial protections may not be necessary for employees at all levels, however they will be very useful when employees have direct contact with customers or access to information which would be of use to a competitor, such as customer lists, pricing lists and supplier lists. Incidentally, contracts of employment can also be a useful way of protecting your business’s trade secrets, confidential information and intellectual property.

There is an opportunity to include post-termination restrictions in contracts of employment when recruiting new staff. For existing employees, their agreement must be sought before changes to their terms and conditions may be made and further consideration may be necessary in order to include such restrictions.

For further information, please contact Sharon McArdle, Associate Solicitor, Employment Department on Belfast 028 9055 3300 or email, sharon.mcardle@tughans.com.

The content of this article is provided for information purposes only and does not constitute legal or other advice.