Employment law and legislation is an endlessly-moving feast, and no 21st century business owner or manager can afford to take their eye off the ball, lest we find ourselves unwittingly falling foul of shifting case law and legislation. Non-compete clauses are an excellent case in point.
Also sometimes known as restrictive covenants, or post termination restrictions, they can be a real and valuable business necessity, particularly in firms where eemployee’s may acquire confidential information about key business interests such as the identity of clients, client requirements and pricing, product /tech/ideas and information about future business strategy during their employment.
But before writing a non-compete clause into your employment contracts you really need to know your onions, or you risk coming a serious cropper.
The law changes at an alarming rate and you may find that you are using non-compete clauses that were once perfectly acceptable but are no longer deemed so – which could land you in seriously hot water at a later date.
Even the big boys aren’t immune to the law, and Amazon found itself in hot water not so long ago, when it was forced to abandon a non-compete clause for its hourly associates, amid a storm of criticism and the inevitable brand damage.
A clause preventing an ex-employee from working for your competitor is extremely difficult to enforce because you cannot use these clauses just to prevent ex-employees competing with you. You can usually only successfully enforce such a restrictive covenant if you can show that the ex-employee has confidential information which, if it fell into the hands of your competitor, could cause you serious harm and that awarding you damages would never make good that damage.
Covenants like this can be used very sparingly, but reserved for those who are either very senior and know all the confidential plans of the business or those who are not so senior but have confidential information and/or key trade contacts in relation to key matters such as pricing or sales.
With further recent case law, siding very clearly with protecting the rights of the employee, there is no doubt that employers should tread softly where non-competes are concerned.
Not sure where to start? Start with a diary entry! Pop an HR Health Check into the diary with me for a full review review of your employment contracts, people policies and procedures into the calendar with me, and I will ensure that your all your employment documentation, people policies and practices continue to reflect current job changes, legislation, and changing case law – keeping you out of the courts and hot water!
Call Emma today on 01280 848415 if you have any questions about non compete clauses in your contracts. You can also take advantage of our special offer and sign up for your first month of our HR Oxygen Service for FREE. After your first free month, you will be signed up to the on-going HR Oxygen Service at the agreed monthly charge rate