April 14, 2021
It takes businesses years and even decades to build up their customer base and cultivate their employees. When an employee resigns or has his/her employment contract terminated by an employer, there is always a risk that he/she might join a competitor and poach clients and employees of the employer.  It is of utmost importance that such risk is minimized as far as possible in accordance with the law. In this article, we will discuss how to utilize post-termination restrictive covenants in employment contracts to protect an employer against the risks identified above. 1.    What are Restrictive Covenants? A restrictive covenant is a contractual clause which aims to regulate the activities of the employee after the termination of their employment relationship. Some examples of post-termination restrictive covenants are as follows:- Non-compete covenants These covenants restrict the departing employee from working in a similar job position for a competitor of the employer. Non-solicitation of employees These covenants prevent the departing employee from recruiting their former colleagues to join them in their new employment. Non-solicitation of clients These covenants prevent the former employee from dealing with the clients of the employer. 2.    When are restrictive covenants enforceable? Restrictive covenants are generally considered as restraints on trade and unenforceable unless the employer can justify that it is reasonable in all the circumstances to protect a legitimate business interest. 2.1    What are “legitimate business interests”? The burden falls on the employer to demonstrate that the restrictive covenant is used to protect a legitimate business interest. Examples of legitimate business interests are the protection of relationships with customers and suppliers, business goodwill, confidential information or...
November 10, 2020
The flexible services offering will become a practice group sitting alongside the firm's traditional service lines ...