Restrictive Covenants

In a nutshell restrictive covenants can be used to prevent former employees from:

• acting in competition with your business
• taking your clients
• poaching your employees

Such clauses are notoriously difficult to enforce.  For example, it might be reasonable to restrict a former employee from carrying out a similar role in a competing business in your town.  However it may be unreasonable to seek to restrict them from competing anywhere in your region. 

The key to the enforceability of such clauses is protecting your legitimate business interests versus attempting to restrain trade.  We will work with you to try and strike the balance.

It is vital that careful consideration is given to the preparation of restrictive covenants.   As part of the preparation we will 

• build up an understanding of your business
• work with you to establish what is needed and why
• advise you on how we strike the balance 

Recently the courts appear to be more willing to enforce such restrictive covenants.  If you think a former employee may have breached a restrictive covenant, my colleague Grahame Henry in the Dispute Resolution Team will be able to advise and assist with enforcement or reaching a settlement without going to court.