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Enforcing a restrictive covenant – what are the options?

Tuesday, 3 March 2015

office-3-217825-mIn our recent article we looked at how restrictive covenants can be used to protect businesses from losing out when an employee leaves, provided that there is a legitimate business risk. Restrictive covenants must be expressly agreed to by the employee in their contract in order for them to be valid, but what happens when they leave and you suspect they may be breaking these conditions?

To stop an employee from breaching the conditions of the restrictive covenants in their contract an injunction could be obtained, provided that there is some evidence of on-going wrong-doing (i.e. proof the employee is breaking a particular covenant).

An example of how an injunction could be effectively used is to prevent a mass exodus of employees through a non-poaching clause. If it can be proved that an employee is attempting to poach former colleagues away from a business to a new employer or their own company, then they may be able to stop staff from joining the new employer, provided that the clause was drafted accurately and the court is convinced that the terms of the clause are reasonable and only as broad as is necessary.

Another example of this could be an employee using business secrets such as customer information to the benefit of their new employer or their own business. If evidence can be provided then the court grant an injunction to stop this information being used.

Employees often have access to sensitive information and if they choose to use that information to their advantage, problems can arise. The application for a disclosure order is another tactic which can sometimes be used in order to request that the employee surrenders this information immediately.

Similarly, a business could apply for disclosure of an account of profits giving details of what amount of profit has been generated as a result of breaching a restrictive covenant, for example, as a result of soliciting former clients or customers.

Rollingsons Solicitors have extensive expertise in pursuing restrictive covenant litigation and handling issues quickly and cost effectively. Click here to read more about restrictive covenants or contact us on 020 7611 4848 to arrange a complimentary consultation.

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