Principle applies mainly to senior members of the company and important e/es
– E/ee has a long notice period (6 months)
– E/ee is paid to stay away and not work anywhere
– his Contract continues while he is at home
– E/er must show he has a legitimate interest to protect if the e/ee argues against it (ie, confidential info, e/er worried he’ll tell customers he’s leaving, as seen in the cab services England)
– Must be an express clause in the contract – it is very unlikely that a Court will imply this type of clause but it can be agreed between the parties by consent
– Problem for e/ee is that it could affect his future if he’s off the market and not working for 6 months
– Clause can be combined with –ve covenants so that an e/ee has 6 months garden leave followed by 12 months –ve covenants
Remedies for e/er = Injunction and damages (as above)
Solicitation /Poaching clauses
- Companies may want to put in a solicitation clause or poaching clause into the contract for when the employee leaves so as to give the replacement a chance at building up a relationship with clients.
- It may be reasonable to put in a clause restraining them from contacting the clients.
- Check how often the clients are in touch with the employee before the end of the contract
- If the clients are users of the business weekly then it may only be reasonable to restrain them from contacting them for 6 months.
- If annually then perhaps restraint for a 2 year period.
- If the clients call the ex-employee themselves then they may not be in breach.
- To overcome this a non-dealing clause could be put into the contract.
- The restriction should only be for the work that they actually do with you.
- The distance should not be wider than what they did for that particular employer.
Effect of restrictive covenants and dismissals
- If an employee is wrongfully dismissed then the employers cannot rely on the contract but can rely on implied terms in the contract as these continue.