As an employer can you protect your business by placing ex-employee restrictions on their activities once they leave your employment? The simple answer is why would you not?
Why have ex-employee restrictions?
Ex-employees don’t always leave under the best of circumstances. Protecting your business against ex-employer activities, such as taking your clients, setting up in competition, or damaging your business and reputation may be sensible.
In our ever-increasingly litigious society you may live to regret failing to apply ex-employee restrictions on your employees. Adding clauses to your employment contract stating what employees can’t do once they’ve left your employment is positive protection.
Time and again we hear of businesses being hurt by the malicious actions of ex-employees. Examples of them trying to take clients, bad mouthing the business, poaching staff etc are very common. It’s important that you make it very clear that such activities are not acceptable even once the employee has left. There are a number of ways you can make this happen.
4 basic ex-employee restrictions
The most common way is to set out the agreement in a restrictive covenant as part of the employment contract that covers 4 basic areas of restriction, these are
- A non-compete clause preventing the employee setting up in direct competition
- A non-solicitation clause protecting you from your customers being taken
- `A non-poaching clause which prevents the taking of your employees
- A non-dealing clause which prevents contact between the employee and clients or future clients of the company.
Each clause needs to clearly list and explain its meaning to prevent any misunderstanding by the employee when they’re signing the contract. You don’t want ambiguity here. But, you do need to be careful as the clause, if it is too restrictive and goes beyond protecting your immediate interests, might become invalid because of its unreasonableness.
What happens if an ex-employee breaches these conditions?
Any employee breaching post termination restrictions could be summoned before a court of law. They’d be expected to detail what they’ve done which could result in damages being awarded to you. But, if you aren’t protected you might find the best you can do is issue a Cease-and-Desist letter in the hope the employee stops what they are doing.
Ensure you are fully protected from the get-go by implementing contracts of employment including ex-employee restrictions clauses preventing ex-employees from potentially damaging your business.
Call us now on 01706 565332 for a no obligation, free to you, conversation about ex-employee restrictions
Metis HR is a professional HR Consultancy based in the North West of England supporting clients across the country. We specialise in providing outsourced HR services to small and medium-sized businesses.