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Restraint of Trade – A brief guide for Jersey businesses

Employment Law | Jersey Business Legal Services

Employers commonly use post-employment restraint of trade clauses or restrictive covenant clauses (“Restraint of Trade Clauses”) to protect them from employees soliciting the employer’s customers and retaining confidential information, after having their employment with the Employer terminated.

The usual restraints

The usual covenants which operate at the expiration of the period of employment include restraining a former employee from “soliciting” or “enticing” the former employer’s:-

  • Clients
  • Employees
  • Business contacts such as intermediaries

The covenants generally imposed on a former employee are the following:-

  • The non-disclosure to others of confidential information and knowledge acquired during the employment or use therein
  • Not acting (either directly or indirectly) for former clients of the employer
  • Not employing employees of the employer

Validity of Restraint of Trade Clauses

The common law position in relation to Restraint of Trade Clauses was set out in the leading Jersey case of Rossborough v Boon & Aziz.

In determining whether a restraint is reasonably necessary to protect the employer’s interests, the Royal Court will have to consider the following factors:-

  • The nature of the “protectable” business interests to protect
  • The nature and geographical spread of the employer’s business
  • The time period of the restraint’s application
  • The extent of the geographical restraint
  • The structure of the employer’s client base and the business’ goodwill
  • The characteristics of the employee, including his or her seniority, duties and possession of trade secrets and confidential information

The Royal Court will also compare the employer’s protectable interest with the relevant employee characteristics, to evaluate whether the restraint goes beyond what is necessary to safeguard the employer’s protectable interest.  In effect, such a clause is void or unenforceable, unless it imposes no greater restraint than that which is reasonably necessary for the protection of the legitimate interests of the party seeking to uphold it.

Employees need to carefully consider the Restraint of Trade clause prior to signing an employment contract and employers need to consider how to best protect their interests.

Parslows Jersey employment lawyers are experts in restrictive covenant drafting and analysis.  If you have any issues with an employee, or want specialist advice on restrictive covenants, contact our experts today.

For advice, assistance or further information on employment restraint of trade please do not hesitate to call 630530 or email us on employmentlawyers@parslowsjersey.com

Parslows Jersey can help

Our employment lawyers support fairness and best practice in the workplace. We are experts in all aspects of Jersey employment law, including employment contracts and policies, redundancies, disciplinary, capability and grievance procedures, discrimination, compromise agreements and tribunal representation. Our lawyers have a proven track record in providing advice and representation on a wide range of employment law issues. Our employment lawyers have the experience and knowledge you need, whether advising on a contract or representing you in an employment tribunal. We’re committed to helping you get the best outcome possible. We act for both employers and employees.

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