Garden Leave Clauses

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.
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