Your customer/ client relationships are valuable to your business, right? So of course you want to stop those clients or customers jumping ship when an employee, with whom they dealt as a result of their employment with you, resigns or their employment is terminated.
Preventing this from happening is mostly down to the terms of the employment agreement entered into at the start of the employment relationship.
Have a well-drafted and customised restraint of trade clause in each and every employment agreement.
Make sure these clauses survive the employment relationship. When determining whether restraint of trade clauses are to be upheld, Courts will consider the following factors (among others), which should be considered in drafting the clause to begin with:
- The negotiation process, and in particular, comments made when negotiating restraint clauses.
- The bargaining position of the parties. Was there an imbalance in power between the employer and the employee at the time of agreeing to the restraint? Did the employee have the opportunity to obtain legal advice?
- The nature of the employer’s business and characteristics of the employee. The closer the employee is to the employer’s customers, the more likely the restraint will be reasonable.
- Whether any consideration was given for the restraint.
- The duration of the restraint and geographical area. The longer the time and wider the area, the less likely it will be reasonable. This can often be resolved by cascading clauses relating to time and area.
Have a well drafted and customised Confidentiality Clause and/ or separate Confidentiality Deed
What is Confidential can come down to a definition in a contract, so valuable trade secrets or specific information or systems the employee will be exposed to should be included.
Remind the employee of their legal obligations upon termination
Whether the termination or cessation of the employment relationship was friendly or not, it is good practice to issue a notice to the employee upon the conclusion of the employment relationship which restates their ongoing contractual relationships.
If you believe a former employee is breaching a restraint or misusing confidential information, it’s important you act fast! Often, a clear and well drafted cease and desist will do the trick.
If you are concerned about the terms of your employment agreement and/ or the actions of a recently departed employee, talk to an employment law lawyer, who will be able to advise you of your rights and develop a plan of attack.
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