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A six-step guide to protect your business against breach of restrictive covenants

Breaches of employment contracts happen every day – being vigilant and making employment contracts water tight is critical.  St Albans dispute resolution solicitor Gemma Newing provides a six-step guide to protecting your business.

1. Seek legal advice at the earliest opportunity 

Is your business protected adequately - restrictive covenants in place?

It is vital to protect your business against employees taking competitive information to another employer

The relationship between your employees and your customers is key to the success of your business. When employees leave, you may find that the employee is looking to remain in the same industry and use the relationships they have formed with your customers when moving to their new employer. It is therefore important to have restrictive covenants in place within their employment contract – this sets out the restrictions they are to abide by. If you discover an employee is acting in breach of the restrictive covenants, you should seek legal advice at the earliest opportunity. Contact me, Gemma Newing if you suspect foul play.

2. Gather evidence immediately

Upon discovering breaches of the restrictive covenants, you should carry out a thorough investigation, collating all documentary evidence showing the breaches. So, if the employee has made contact using their work email address notifying a customer of their moving to a competitor, that can evidence a breach by the employee.

3. Act quickly to avoid further damage

You should act promptly collating evidence of the breaches. If you take the decision to start proceedings, seeking injunctive relief for example to restrain the employee from carrying out activities contrary to the restrictive covenants which will cause damage to your business, any delay in bringing such action could be a bar to the remedy(s) being sought. A delay of days/weeks could defeat the purpose of the post termination restrictions.

4. Talk to your solicitor about an injunction

Once the evidence has been gathered, your legal team can discuss with you whether it is appropriate for you to apply to the Court seeking an interim injunction. By seeking an injunction you would be looking to restrain the employee from carrying out the activities complained of. If the employee has taken physical documents belonging to you, you may also seek an order for the return of such documents. An injunction is a discretionary remedy, with it being necessary for you to demonstrate to the Court that you have a good arguable case. An application for an injunction does not require the Court to make any final or detailed determination on the merits of the claim, rather it is an assessment by the Court as to whether there is a serious issue to be tried in proceedings that will follow if the injunction is successful.

5. Spend time cementing relationships with customers

It is important not to become solely focused on the misbehaving former employee and how to stop their actions. While this is of course extremely important, you should also take the time to actively bolster your relationship with customers, especially those who have been contacted by the former employee. The purpose of the post termination restrictions, and the period referred to within them, is to enable the employer sufficient time to cement their business relationships with customers and clients.

6. Review your employees’ contracts to protect your business

It would be prudent for you to also review the employment contracts of all your employees and seek legal advice upon them, to ensure they provide suitable protection and the restrictive covenants within them would be deemed enforceable by the Court. So that if you find yourselves in the unfortunate position where something similar happens with another employee, you are in a strong position to protect yourselves.

If you enjoyed this post, read my post on ‘Is an employee breaching the restrictive covenants in their employment contract and destroying your business in the process?‘ or read my colleague Mark Fellows’ (an employment solicitor) post on ‘How to ensure restrictive covenants in employment contracts are enforceable.’

If you suspect an employee may be in breach of restrictive covenants in their contract or you feel that a review of your employment contracts could prevent such a situation, please don’t hesitate to get in contact with me. Gemma Newing at Sherrards Solicitors or call 01727 832830.

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