Restrictive Covenants

A restrictive covenant is a clause in the employee’s contract of employment which usually places restrictions on the employee after their employment has terminated from working for a competitor and prevents the employee from poaching existing and past clients of the employer as well as the employer’s staff. 

It is for an employer to seek to enforce a restrictive covenant in the Courts if it suspects that there has been a breach by the ex-employee. Ordinarily, restrictive covenants that are in excess of 6 to 12 months’ duration and cover a wide geographical area are unlikely to be enforced by the Courts. To be successful, the employer must show that the restrictive covenant is designed to protect its legitimate business interests and that it extends no further than is necessary to protect those business interests. Further, the employer will need to show some sort of loss resulting from a breach of the restrictive covenants such as a loss of profits on contracts or loss of opportunities.