In a bid to protect the business when an employee leaves, a firm will often include post termination restrictions in its employment contracts.
Also known as restrictive covenants and non-compete clauses, post termination restrictions aim to restrict an employee’s right to perform certain activities in competition with their former employer once they have left the business.
Here, Michael Shroot, chief executive officer and a solicitor at WHN who specialises in employment law, offers his top tips for those accused of breaching a post termination restriction after an employment relationship has ended.
What do post termination restrictions cover?
Ranging from soliciting clients or key employees, to not working for a competitor, setting up as a freelancer or divulging sensitive information about the business or its clients, these clauses come into force once the employment has been terminated or the staff member has resigned.
When leaving a job, many people choose to go work for a competitor. It is at this point that many businesses may try and protect its position – or even go above and beyond their legal rights.
Some businesses send warning letters to ex-employees. These warning letters may range from asking an ex-employee to make undertakings such as promises not to approach company clients, to making threats of an injunction if they use confidential information or work for their new employer.
Some businesses go further and threaten the new employer with an injunction if it is causing them lost business.
Help is at hand
If you find yourself in this situation, act fast as these types of letters usually demand a response within a short period of time. You should never ignore such a letter.
Breaching a post termination restriction is serious and it’s vital that you seek specialist legal advice before doing anything that may expose you to the risk of a claim.
Michael recently acted for a client who had ignored a letter before seeking specialist legal advice, thinking it would go away and that the ex-employer was not serious. This unfortunately was not the case, and a claim was issued against the client, resulting in an injunction being given and a liability for the ex-employers considerable legal costs.
This could have left the client facing a large legal bill for ignoring the letter before action, but luckily the new employer sought Michael’s advice before it reached this stage. Ultimately, they went on to win the case and the claim was struck out, as well as the client recovering a fair proportion of legal costs from the previous employer.
Do not respond on your own
Every step in a case like this is crucial, with all the facts needing to be analysed before the law is applied to navigate the correct way forward.
Collating as much evidence as possible is imperative here, including contracts, emails and text messages to display a chronological order of events.
This area of law is complex and involves a mixture of both employment law and commercial dispute knowledge, so taking advice from a solicitor who specialises in this area of law – like Michael – is vital.
At this stage, it may be worth letting your new employer know that you’re dealing with it to ensure your employer has confidence in you, as some employers may be concerned about getting involved.
Remember, don’t act in haste, take correct legal advice and respond appropriately.
Michael Shroot is chief executive officer and a solicitor based at WHN’s Bury office. Michael has specific expertise in employment law and contract disputes. He is a member of the Employment Lawyers Association. To contact Michael, call him on 0161 761 8087 or email michael.shroot@whnsolicitors.co.uk
