Restrictive covenants are clauses in employment contracts that limit an individual`s ability to work for a competing employer or to solicit clients and customers after leaving a job. These clauses are often included in employment contracts to protect an employer`s business interests. In the United Kingdom, the use of restrictive covenants has become increasingly popular with companies looking to safeguard their proprietary information, trade secrets, and intellectual property.
There are various types of restrictive covenants that employers can include in employment contracts. The most common types include non-compete clauses, non-solicitation clauses, and confidentiality clauses.
Non-compete clauses prevent employees from working for a competitor or setting up a competing business after leaving their current job. This type of covenant is often used to prevent employees from taking knowledge, skills, and contacts with them to a competing business.
Non-solicitation clauses prohibit employees from soliciting or approaching clients/customers of their former employer for a set period of time. These types of covenants are typically used to protect client lists and customer relationships.
Confidentiality clauses require employees to maintain the confidentiality of sensitive information and trade secrets that they may have access to during their employment. These covenants are designed to protect a company`s proprietary information from being disclosed to competitors.
Employers must be careful when using restrictive covenants in employment contracts as they can be challenged in court. In order for a restrictive covenant to be enforceable, it must be reasonable and not go beyond what is necessary to protect the employer`s legitimate business interests.
If a restrictive covenant is found to be unreasonable, it may be deemed unenforceable. In such cases, employees may be free to compete or engage with clients/customers of their former employer.
In conclusion, restrictive covenants are becoming increasingly common in employment contracts in the UK. Employers must be careful when including such clauses in contracts as they must be reasonable and necessary to protect their business interests. Employees, on the other hand, should seek legal advice before agreeing to restrictive covenants to ensure that they are not unfairly prevented from competing in their industry after leaving a job.
