Post-termination restrictions are clauses found in employment contracts that intend to prohibit an action of an ex-employee following their termination. They are also referred to as “restrictive covenants”.
Understanding Post-Termination Restrictions
There are several restrictions you should be aware of when signing an employment contract. Some examples are:
- Non-solicitation restrictions, which prevent the solicitation of clients or customers of the employer that the employee had dealings with during the course of their employment;
- Non-dealing restrictions, which prevent the dealing with clients or customers of the employer that the employee had dealings with during the course of their employment;
- Non-poaching restrictions, which prevent the poaching of key employees of the employer that the employee had dealings with during the course of their employment; or
- Non-competition restrictions, which prevent an employee from working for a competitor of the previous employer.
It is recommended to seek advice from an employment solicitor in relation to post-termination clauses prior to signing a new employment contract, to ensure that the clauses are not too restrictive or unreasonable.
Are post-termination restrictions enforceable?
Post-termination restrictions are not enforceable by default. Any contractual term that restricts an employee’s activities after termination of their employment is void for being in restraint of trade and contrary to public policy, unless the employer can show that:
- It has a legitimate proprietary interest that it is appropriate to protect; and
- The protection sought is no more than is reasonable having regard to the interests of the parties and the public interest.
Cases in this area therefore turn on their own facts and careful consideration needs to be given to the restrictions and the specific circumstances.
How will the current Government non-compete clause reform affect you?
Following the UK’s departure from the EU, the Government are in the process of announcing new employment regulations in order to help boost competition and innovation.
The Government has stated that they intend to introduce legislation to limit non-compete clauses in employment contracts to three months, typically, a non-compete clause is around six to twelve months, although lengthy non-compete restrictions are often not upheld.
Non-compete clauses are often viewed as burdensome for employees particularly where an individual works in a specific industry, or perhaps has developed a niche area of work, a lengthy non-compete clause can leave an individual out of the job market for some time.
Through the Government’s intention to limit the non-compete period, it should allow for better flexibility for employees to move jobs in the same sector. This in turn from a government perspective should promote more competition in the job market, leading to more applicants for roles and therefore improving the overall quality of candidates.
This is an interesting development although the Government has not yet provided timescales for the proposed changes and time will tell as to whether the Government does act on their intention to promote employee rights and flexibility.
If you require further information in relation to post-termination restrictions or you have a new employment contract you would like advice on, please contact our employment lawyer, Chloe Baxter.
