If you are entering into an employment contract or planning to resign from your employment you should always take any form of restrictive covenant in an employment contract seriously.
These type of covenants can be enforceable against you and entwine you in legal action causing financial and other adverse knock-on effects.
Why do employers insist on restrictive covenants in an employment contract?
The main reason for restrictive covenants is to protect the business.
Restrictive covenants can prevent important information from being used and passed on by you. They are designed to prevent you from exploiting your ex-employer’s customer base and trade connections and taking business with you to a new employer.
What are the main types of restrictive covenants?
The main types of covenants that are commonly found in an employment contract are as follows:
- Non-solicitation covenants – this is used prevent you approaching clients, customers or suppliers of your former employer
- Non-dealing covenants – this is used prevent your dealing with clients, customers or suppliers of your former employer, irrespective of which party approached the other
- Non-poaching covenants – this is used to prevent you poaching former colleagues
- Non-competition covenants – this is used restrict you from competing with your former employer
Depending on your employment, a number of these (and others) may be used to protect the business.
Will the restrictive covenants be enforceable against me?
As long as the restrictions do not go further than simply “protecting legitimate business interests” of your employer, a Jersey court may well enforce non-competition clauses and other restrictive covenants against you.
In essence the Royal Court would consider the following:
- As to how restrictive the covenants are to you. The Royal Court will calculate whether the measures truly protect the business or whether it intentionally prevents you from earning a living because the restrictions are too wide in their impact
- Whether the restrictive covenants are in the legitimate interests of the business
- Your role – consideration is given to where performed your role, your knowledge of the business and or your seniority in order to determine if it is reasonable to impose the restrictive covenants
How long do restrictive covenants last?
You would need to review your employment contract. This will set out the time frame your ex-employer deems necessary to protect its legitimate business interests. Whether this time frame is actually enforceable will again depend on whether the time frame is reasonable or not to protect its legitimate business interests.
How would my ex-employer prevent me from using confidential information or poaching staff?
If the breach is deemed serious enough you may find yourself facing injunctive proceedings and or a claim for damages. This would be a serious state of affairs and not only could it cost you in legal fees you could also find yourself in difficulty with a new employer.