Written by Leah Waller

Senior Employment Consultant Solicitor

Post-Termination Restrictions (also referred to as Restrictive Covenants) can be used to protect your business when your staff or employees no longer work for you.

Post-Termination Restrictions are used to prevent employees and staff  from using the confidential information and trade secrets they have been made aware of during their employment in competition with that employer.

Post-Termination Restrictions are usually set out in an Employment Contract (or referred to in the Employment Contract) but may well be signed during the employment or indeed when the employment terminates (perhaps within a Settlement Agreement). 

In order for a Post-Termination Restriction to be enforceable, meaning that an Employer can rely upon it, the Employer will need to demonstrate that it has a legitimate interest that it is appropriate to protect and that the protection sought (by the Post-Termination Restriction is no more than is reasonable (having regard to the interests of the parties and the public interest).

Some of the most common Post-Termination Restrictions include the following:

• Preventing an Employee from setting up, or working, in competition with the Employer once their employment with the Employer has terminated;

• Preventing an Employee from soliciting, enticing or encouraging the Employer’s employees, staff, contractors, consultants, suppliers, customers and/or clients to leave (or terminate their contracts with) the Employer;

• Preventing an Employee from dealing with and/or providing goods or services to suppliers, customers and/or clients of the Employer.

Now, Post-Termination Restrictions cannot restrict former Employees indefinitely nor can they be for longer, or for a bigger geographical area, than necessary to protect the Employer’s legitimate business interest.

Post-Termination Restrictions must be carefully drafted to ensure they are valid and enforceable as they can quite easily be ruled as invalid and then the Employer will not be able to rely upon, or enforce, them.

There is no definitive legislation or case law that sets out how long Post-Termination Restrictions can be for whilst remaining enforceable but the time period must be ‘reasonable’ and any Court will consider the amount of confidential information that the Employee has access to and the greater the extent of the confidential information, the longer time period is likely to be enforceable.

However, the duration of the Post-Termination Restriction should be limited to the minimum period which is sufficient, to effectively disrupt the Employee’s ability to carry on a similar business with the existing customers, of the Employer, that they had dealings with during their employment.

The geographical area of any Post-Termination Restriction should be limited to the “catchment area” of the Employer’s Business and their usual business territory.

Where an Employer is considering including a Post-Termination Restriction to prevent an Employee from dealing with and/or providing goods or services to suppliers, customers and/or clients of the Employer, the Employer should consider whether this should be limited to those suppliers, customers and/or clients that the Employee dealt with during the previous months of their employment (it will be for the Employer to decide the appropriate number of months, depending on the Employee, their role and the level of information that they were privy to).

We act for both Employers and Employees so whether you are an Employer that wants to ensure that your Post-Termination Restrictions are enforceable from the outset, or want to enforce Post-Termination Restrictions that a former Employee has breached, or if you want advice as an Employee as to whether the Post-Termination Restrictions you have signed are enforceable, or are indeed being pursued due to a breach of a Post-Termination Restriction, we can help.

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We act for BOTH Employers and Employees and so, if there is anything you require assistance with, our Employment Department at Greystone Solicitors offer a FREE initial consultation and are more than happy to help.

Call us on 01582 343453 or email on Info@GreystoneSolicitors.co.uk