Changes to non-compete clauses

Non-compete clauses are those which prevent an individual from setting up, or having an interest in a competing business, or going to work for someone who is a competing business.

Many recruiters have a love-hate relationship with non-compete clauses. Some love the protection they offer against their own staff setting up in competition but hate the limitations this may place on hiring new consultants or even on the placement of candidates who may have non-compete clauses with their former employers. The new government proposals to limit non-compete restrictions to three months may therefore be welcomed by some, but for others it reinforces the need for other restrictions to protect against the loss of clients and candidates. 

So, what other steps can a business take?

Some businesses may look to move to longer notice periods and garden leave options whereby staff remain employed but are required to stay away from the workplace with limited access to clients, candidates, and data for the duration of their notice. However, there is an associated cost of continuing to pay an employee when there is no benefit being derived from that employment.

There are other post-termination restrictions that can be deployed, such as; restrictions on the solicitation of clients or candidates, requirements to return or destroy documentation and restriction on the use of confidential information which apply during and post-employment. None of these are affected by the new proposals.

We commonly advise on the enforceability of post-termination restrictions. Whether these restrictions will protect your business, often depends upon the strength of your employment contract. Any post-termination restriction needs to be carefully drafted to protect the legitimate business interests of an organisation and not go further. The absence of proper garden leave provisions within your contract can potentially result in a breach of contract – something which can adversely impact upon other restrictions such as non-solicitation.

If your employment contracts are not up to standard or up-to-date, then getting them looked at and updated before the problem arises is a far better position to be in then arguing the position after the event.

Lawspeed have created and developed rock solid contracts, which are up-to-date and commercially strong. These contracts are supported by our unique contract maintenance service. This is enhanced through our digital platform Proterms, which has been designed to make contract management, hosting and updating terms very easy. It has a host of different functions including user controls, generate/issue, track/store and manage your contracts (with compliance in mind) and staff activity.

For more information on Lawspeed services, get in contact on 01273 236 236 or email info@lawspeed.com.