18th January 2024 | Aaron Heslop | Employment, Dispute Resolution, Restrictive Covenants
Following the Christmas break, with resolutions still fresh in employees’ minds, the start of a new year is traditionally the time when employees across the country begin to make moves to find a new job.
Moving job should be a straightforward matter, but more often than not employees either don’t have a copy of their most recent employment contract or, if they do have copy, don’t look at it for myriad reasons.
When an employee leaves, a good employer will typically arrange an exit interview with a leaver. This is an opportunity for the employer to run through a checklist of items that a leaver needs to deal with before they depart e.g. returning company property, handover of work. Employers should also use that meeting as an opportunity to remind a departing employee of their ongoing obligation of confidentiality and any restrictive covenants they are subject to. Collectively these obligations are commonly referred to as post-termination obligations.
However, so often when we are instructed, we discover that this has not happened, meaning that employee may be about to blithely embark on a new role with a direct competitor, may be setting up themselves in competition, may be contacting clients and contacts that are protected or contemplating poaching former colleagues. However, even if an exit interview does take place, an employee may have their own plans regardless.
Post-termination restrictions to watch out for
A well drafted employment contract will typically contain the following suite of post-termination restrictions:
- Non-compete – these clauses are inserted to prevent the employee from working for a direct competitor of their employer. A well drafted clause will normally home in what is meant by a direct competitor. These clauses may even go further and say that an employee cannot set up on their own and work in competition. (Check out the government website for more details)
- Non-solicitation – a clause of this type will be included in the employment contract where the employer wishes to protect against its clients and contacts from being enticed away to work with the employee somewhere else.
- Non-poaching – this clause is designed to deter the employee from encouraging their former colleagues to leave their employment.
- Non-dealing – this restriction is sometimes inserted to widen the effect of the above covenants, so that a departing employee is prevented from soliciting or poaching, but also that they cannot even deal with / have contact with the people defined in those clauses.
- Confidentiality – this is an ongoing restriction that carries on in perpetuity. If well drafted, the clause will contain a concise list of information that is considered to be confidential and should not be utilised in any way by the employee.
Action points for employers and employees
If you’re an employer, ensure you have an exit interview/meeting with a departing employee. Make it clear to them what restrictions are going to apply to them after they leave and confirm it in writing to the employee.
Review your existing employment contracts and check that they contain appropriate and properly drafted post-termination obligations.
If you’re an employee, familiarise yourself with the terms of your contract and understand what you can and cannot do after leaving employment. If you are unsure, you could either take pre-emptive legal advice or seek clarification from your employer. Ensure that any clarification is in writing, so you can rely on it later if needs be.
If you’re an employer and you’ve discovered that an employee has left and is now acting in breach of their contract or you’re an employee that’s now being pursued by your former employer, please contact Aaron Heslop for a no obligation discussion.
Furthermore, if you’re looking to review your existing employment contracts, we would recommend a discussion with our Employment Team.