It is common for employers to include a clause in the contract that places some restrictions on the employee after the end of the contract. The restrictions mostly include a non-competing clause and a non-solicitation clause after living employment.
This means the ex-employee is restricted from engaging in any form of business that will likely course competition or take away prospective clients. In most scenarios, it can be for a specific period or territory, depending on the contract.
Nature of restrictive covenants
Employees should take the time to understand the consequences of restrictive covenants in a contract. As an employer drafting a good contract is important to make it easy for the employee to understand what they are getting into.
You can find clear templates from NetLawman.co.uk. The site offers a variety of restrictive covenants in the form of templates that you can customize to fit into your contractual conditions and get reviewed by the experts on the site.
In the meantime, employees are encouraged before signing an employment contract to read and understand the terms. The employee should know what action the employer will take if found in breach. It may include a lawsuit.
Non-competing covenant
The non-competing clause is one of the most common restrictive covenants in an employment contract. The clause intends to prevent an ex-employee from doing business that will likely cause completion to the ex-employer. This is because the ex-employee is likely to have material knowledge and the tools of the trade of such a business.
An example of a non-competing clause maybe as below;
“The employee shall be restricted from engaging in any form of business or employment that is similar or likely to be in completion with the current employer, during the employment period or five years after the end of the current contract.”
The non-solicitation covenant
The other common clause is the non-solicitation clause. The clause seeks to restrict the employee from taking over prospective customers from the employer. This can be indirectly soliciting clients for personal benefit or even preventing clients from engaging the employer. This may cause unfair completion to the employer hence the need for a safeguard informs of a covenant.
An example of a non-soliciting clause may be as follows;
“Without prior written consent from the employer, the employee shall be restricted from directly or indirectly soliciting, diverting or taking advantage of prospective clients, during the employment period or five years after the end of the employment contract.”
What employers need to understand about restrictive covenants
When drafting an employment contract, the employer is acting in the interest of the organization. The restrictive covenant in an employment contract is a safeguard from actions that may be detrimental to the success of the business.
The actions of the employee from trying to cause potential harm to the employer must be stipulated. The employer needs to ensure the clause is reasonable and doesn’t go against labour laws.
The clause should be unambiguous and not unconscionable on its restrictions because factors such as jurisdiction may be called to question. Evidence of the nature of protection must be available, for example, trade secrets.
What employees need to understand about restrictive covenants
Most employment and Labour relation Laws are drafted to favor the employee from exploitation by the employer. It is common for employers to take advantage of employees and one of them is under restrictive covenants.
To ensure that it doesn’t occur, employees are encouraged to read and understand these clauses. In addition to the nature of restrictive covenants, the employee needs to know its consequences and be ready to live by them when they sign the contract. Your rights and duties must be made clear and unequivocal and if you are not in a position to understand, get the services of an employment lawyer.