By Natasha Smith, Senior Associate
Sometimes employers can attempt to impose unreasonable and/or unfair restrictions on employees. Any contractual term restricting an employee’s activities after termination is void for being in restraint of trade and contrary to public policy, unless the employer can show that:
The following should be kept in mind when drafting a PTR:
In December 2020, the government launched its consultation on measures to reform post-termination non-compete clauses in contracts of employment.
The two main options set out in the consultation paper were as follows:
The consultation closed on 26 February 2021, but there has been little by way of update on when the response will be published.
In the meantime, many employers are finding recruitment and retention challenging at the moment. The number of job vacancies in the UK is at an all-time high and this means that, now more than ever, employers will be desperate to retain their best employees and businesses will therefore have a fight on their hands to attract new talent.
The reality is that, however well they are treated, employees are entitled to and will leave from time to time. Whilst employers can’t stop them doing so, they can take steps to limit the damage they might do to their business if they do leave which, by extension, could be a factor which may encourage an employee to stay for a time. To achieve that, employers would be wise to consider the following, when aiming to maintain and strengthen their workforce:
Importance of seeking legal advice in relation to PTRs
For employees: Legal advice over the enforceability and scope of the PTRs should be sought prior to joining a competitor. In case of a breach of an enforceable PTR, an employee may be liable to a claim of breach of contract and in some cases may even be restrained by a court injunction from joining a new employer.
For new employers: Legal advice over the enforceability and scope of an employee’s PTRs should be sought prior to offering the employee a job. An ex-employer could potentially bring a claim against a new employer in connection with their involvement in wrongful conduct by the former employee. If the legal advice obtained is to the effect that the PTRs are likely to be enforceable, the new employer should proceed with caution.
For ex employers: An ex-employer should seek robust legal advice on enforceability of the PTRs before taking any action. Where it suspects that a departed employee has acted in breach of PTRs, it should seek further legal advice to understand whether the employee’s conduct is, in fact, in breach of the PTRs and, if so, whether to commence legal proceedings. Where an ex-employer has commenced legal action and is unsuccessful in seeking the remedies it has sought, the Court will likely order the ex-employer to bear the ex-employee’s and/or the new employer’s legal costs in defending the action.
If you would like to discuss the potential legal implications for employers who are dealing with post termination restrictions or any other employment matter, please do not hesitate to contact Joseph Oates on email: firstname.lastname@example.org or Natasha Smith on email: email@example.com or tel: 01892 515022.
This blog is not intended as legal advice that can be relied upon and CooperBurnett LLP does not accept any responsibility for the accuracy of its contents.