The possibility that a departing employee might seek to exploit highly confidential information when he or she resigns is a real threat to many businesses. Trade secrets, confidential information and customer related information and details are often as valuable to a company as its physical assets. Unfortunately, far too many businesses fail to appreciate the need to ensure that robust and professional drafted restrictive covenants are put in place to protect those interests.
When it comes to the drafting of restrictive covenants, our lawyers have the experience and technical capacity to know what will and will not work. Our aim being to create restrictions which adequately protect your organisation's legitimate business interests and ultimately, should it become necessary, stand the best possible chance of being enforced by the Court.
If you wish to talk to one of our solicitors about restrictive covenants for your business, get in touch with our Yorkshire-based team today by calling our Leeds, York or Sheffield offices on 0333 323 5292, by sending us an email or by filling out an enquiry form and letting us know a suitable time to call you back.
What is a restrictive covenant?
Nearly every business has information, software, products, etc. that is integral to the success of their business, which if made public or passed on to competitors could have detrimental and far-reaching consequences.
Restrictive covenants are contractual clauses which restrict the use of this information both during and after an employee's time with your business. Including these clauses in the contracts of employment for senior and other relevant employees can help to protect your business and safeguard its future.
Types of restrictive covenants
The most common types of restrictive covenants that employees can use are:
- Non-competition - these covenants prevent the employee for working for competitors
- Non-solicitation - these covenants prevent the poaching of clients, suppliers or customers from a previous business
- Non-dealing - these covenants prevent a former employee from dealing with a previous company’s clients/customers/suppliers (regardless of who initiated contact)
- Non-poaching - these covenants prevent a former employee from poaching key members of your staff
Enforcing a restrictive covenant
Whilst it is possible to look to the court to protect a business from unfair competition, the effective management of confidential information should not be left until an employee's resignation is tendered - it should start the moment a new employee is taken on.
Generally speaking, in order for a restrictive covenant to be legally binding, it must be carefully drafted to ensure that it goes no further than is required to protect a business's legitimate business interests. For example, worldwide restrictions or restrictions which seek to prevent ex-employees for competing for excessive periods of time will rarely if ever be upheld by the courts.
Implications of monitoring employees communications
As the number of ways of monitoring employee communications has increased so has the regulatory framework governing their use, such as the Data Protection Act and The Regulation of Investigatory Powers Act.
It is key that employees are given information about monitoring activities and that employers understand the extent to which monitoring can be lawfully carried out. All employers should have a well drafted and legally compliant communications and monitoring policy in place and must take steps to ensure that all members of staff understand the policy and are aware of the circumstances in which monitoring may take place.
Protecting your business
Whilst you may not be able to routinely monitor communications, there are other practical steps you can take in order to protect your business.
- What information does the employee have access to which would damage your business if known by a competitor or if the employee was to set up on his own?
- Is that information protected by appropriate clauses in the employee’s contract of employment?
- Is the contract of employment signed and up to date?
- Is it made clear to employees what information is confidential and the legal and reputational consequences of breaching that confidentiality?
- Should additional IT security measures be put in place to protect certain data and should access to certain information be restricted to key individuals?
- More importantly, do you check to see if there is evidence of confidential information being misappropriated prior to resignation, such as the downloading or emailing of documents and databases to personal email accounts? It is the period prior to resignation when confidential information will be at its most vulnerable.
- Is the employee reminded in writing of his obligations regarding confidential information when she or he resigns? Also, will the new employer be put on notice of those obligations and any other relevant restrictions?
If these issues are properly addressed, an employer stands a far better chance of deterring breaches of confidentiality by departing employees. Equally importantly, the employer greatly improves its prospects of success if legal action is required to prevent the ex-employee and his new employer making use of that confidential information and of recovering damages in the event that losses are suffered.
How we can help
At Lupton Fawcett, we have a proven track record of acting for businesses in circumstances where their proprietary or confidential information has been misappropriated by former employees of where former employees have acted in breach of their restrictive covenants by approaching customers, joining a rival or setting up their own competing business.
If your business is affected by any of these issues it is important that you contact us and take legal advice as soon as possible, since the failure to act quickly may limit your business's ability to take effective action.
We will advise you on the appropriate steps to take in order to prevent sensitive information about your business getting into the wrong hands.
Talk to us
Whether you are based in Yorkshire or further afield, we can help you and your business. Call our Leeds, York or Sheffield offices and speak to one of our restrictive covenant solicitors today. Alternatively, complete the online enquiry form below and we will get back to you as soon as possible.
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