It is quite often the case that a company is heavily reliant on the existence of strong working relationships between its clients and employees. From time to time employees will seek new opportunities and may attempt to take advantage of these contacts by taking key clients with them.
The loss of a key client or a series of them can be devastating to any but the largest of businesses. To help protect against this it is important to consider whether appropriate restrictions should be incorporated into an employee’s contract of employment.
The most commonly used restrictions are:
- a non-compete clause, placing restrictions on the former employee working for or setting up on their own as a competitor;
- a non-solicitation clause, preventing former employees from poaching of clients, customers or suppliers;
- a non-poaching clause, preventing an employee from poaching former other staff.
Unfortunately it is not a simple matter of applying a one size fits all set of restrictions to each employee. Courts will only enforce a restriction if it is designed to protect a legitimate business interest and extends no further than reasonably necessary to protect those interests.
As such the restrictions applied to more senior employees are usually drawn more widely than those applicable to junior employees. That can cause problems where individuals are promoted and their terms and conditions remain un-amended.