As Helen Coogan, a solicitor in the employment team at Mace and Jones Manchester explains, once an employee has actually left a business he is always bound by a duty not to disclose its highly confidential business information. Other than this however, a former employee is free to approach, poach and deal with your clients unless there is a specific clause in his contract that prevents this.
“These clauses are known as post termination restraints or restrictive covenants. They can effectively prevent a former employee from dealing with or poaching your clients and even from competing with your business, for a specific defined period of time.” adds Coogan.
Are your restrictions reasonable?
However, such clauses are only enforceable if they are reasonable. Coogan explains that in legal terms this means they should go no further than is necessary in terms of the genuine need to protect your business.
“If restrictions go further than is necessary in terms of, for example, duration, scope and geographical area, they will be void and unenforceable,” says Coogan.
Basically, any restrictions should reflect the actual risk of damage to the business. Coogan explains that, in the case of a small town hairdresser with local clients for example, any restriction covering areas outside that town is unlikely to be reasonable.
When drafting contract clauses for a local business such as a hairdresser, one option is actually to set out the names of key competitors to whom the clause will apply. A restriction on this basis, limited to a couple of months in duration, should be enforceable.
This is an alternative measure that you can consider. Garden leave is when an employee is not required to attend work but continues in employment, receiving normal pay and benefits. The advantage of gardening leave is that there is no contact between the employee and your important clients during this period, allowing for a ‘cooling off’ of the relationship between them.
“If there is a serious threat that an employee who has resigned could take away your customers, then this can be the best way of getting them out of circulation during their notice period,” advises Coogan, who adds, “Garden leave is only an option if the contract provides for it or if it is agreed with the employee.”