Implications of Restrictive Covenants
Settlement Agreements - The implications of your Restrictive Covenants
We are often asked to advise employees, particularly those in senior and leadership positions, about their post-termination restrictions. In some cases, you may be looking ahead to a possible change of role or may have been given a settlement agreement and wondering how your employment contract restrictions might affect your future options.
Different Types of Restrictive Covenants
There are different types of restrictive covenants and the types of post-termination restriction in your contract will often depend on your role and seniority in a business. The most common types of restriction are:
Non-solicitation clauses - to prevent you from approaching former customers, clients or suppliers in order to stop you taking work from them;
Non-compete clauses - to prevent you working in similar role for a competitor;
Non-poaching clauses - to prevent you from poaching former colleagues.
These restrictions will generally not apply forever into the future and should therefore be limited in terms of its length and scope. This is because the restrictions imposed by an employer must not be any wider than necessary to protect their legitimate business interests. At Lawson West our employment law solicitors will be able to check the potential validity of these provisions in order to help you understand what you can and cannot do going forward.
The following are some of the key issues we see in this area and what you can do to protect your position: -
Be aware of what is in the contract before you sign it!
When employees start a new job and receive a new employment contract to sign, not everyone tends to focus on the clauses relating to their departure upon termination. However, this can then become an issue if you are trying to negotiate your exit through a settlement agreement.
Therefore our expert settlement agreement solicitors to help you negotiate out of, or try to secure a reduction of your restrictive covenants when it comes to finalising the terms of your employment ending.
Are restrictive covenants enforceable?
There is sometimes a misunderstanding by employees that restrictive covenants are not enforceable after a settlement agreement is signed. If they are correctly drafted and they are reasonable in order to protect an employer’s legitimate business interest (such as its customer connections or goodwill) then the covenants will be enforceable and can be upheld by a Court.
At Lawson West our employment law solicitors will give you the advice needed when you are planning to move into a job that could potentially be a breach of your post-termination restrictions. If you did breach valid restrictions and cause your former employer a loss as a result, you could end up with a claim to pay any damages or losses caused.
Our solicitors can help advise you on whether there are any potential challenges you can make to the validity of your restrictive covenants. We can also help you negotiate with your employer how to get out or, reduce these restrictions at the same time as negotiating other clauses in your settlement agreement.
Our Specialist Settlement Agreement Solicitors are available to provide the appropriate advice and guidance in relation to any aspect of settlement agreements or employment law.
Please contact us on Tel: 0116 212 1000 or 01858 445 480, alternatively complete the free Contact Us form here and we will get in touch as soon as possible.
See our website pages on Settlement Agreements: