Tuesday, 1 April 2014
Protect your business - and your future
Companies must ensure they take reasonable steps to protect themselves when key staff move on, a local solicitor has warned.
Andrew Oranjuik, from our litigation team at Martin-Kaye Solicitors in Telford, said it was vital that employers paid careful attention to the wording of each staff member’s contract right from the very start.
“When any new employee begins working for your company, set out in their contract a series of restrictions on how they will be expected to behave if they leave. These rules are called restrictive covenants and they are designed to help safeguard your business by stopping former employees giving away confidential information or stealing suppliers or clients. If you fail to include restrictions like this, your business could be in an extremely vulnerable position, and ultimately, your entire future could be at risk.”
Andrew said it was important though that any restrictions were worded in a way that they were considered “reasonable” otherwise they may not be enforceable.
“It’s clear that any restraints you include must not be excessively wide and they will usually only be valid for a set period of time. And if you include a clause that prevents the employee from working for a competitor, this will only be applicable if the restrictions are clearly in place to protect confidential information that you hold or your precious connections with customers.”
Andrew said if a former employee broke the rules, the employer would often seek an injunction from the court to stop any further breaches.
“This is particularly important if the employee has been dismissed or made redundant, as if there is any bad feeling, you will need to limit the amount of damage they can cause – both to your reputation and your business itself. If there is a major breach of the covenant – perhaps they have poached a key client – you can actually make a claim for damages, including the loss of profit your company has suffered as a direct result of their actions.”
Andrew said companies must also ensure they were vigilant in the period before an employee was due to leave.
“You must watch out for any attempts they make to encourage clients to follow them to their new employment, and look for any unusual activity such as printing or copying databases that could be crucial to your business. Most importantly, keep any evidence you find of any wrong-doing as you may need it if the case comes to court later.
“Introducing restrictive covenants may seem a tough stance to take, but you have to protect your business and the rest of your workforce, so you must take them seriously.”