Our solicitors have complete knowledge of restrictive covenants and are ideally positioned to advise you of any issues that may arise as a result of these covenants in your contract, shareholder agreements, partnership agreement, compromise agreement, business/share sale agreement or consultancy agreement.
Restrictive covenants (sometimes called “non-competes”) are a complex and ever- evolving area of employment law. They can be included in agreements to prevent you from competing for business with your employer following the termination of a relationship, such as an employment relationship. They are commonly used in executive, banker and broker contracts where issues of potential competition increase in sensitivity with seniority.
The consequences of breaching a valid restrictive covenant can be harsh and expensive. Enforcement of restrictive covenants can be robust. Courts often agree to impose far reaching and costly injunctions, rather than simply awarding damages. However, many restrictive covenants found in employment contracts are not enforceable.
In principle, clauses that attempt to restrict your right to compete are unenforceable because they are viewed as unlawful restraints of trade, but clauses designed to go no further than reasonably necessary to protect the employer’s legitimate business interests are allowed. The criteria governing the conditions necessary to protect an employer’s business can be very complicated. It is therefore vital to take expert advice if you have restrictive covenants in your employment contract, particularly if you feel they put you at an unfair disadvantage in the marketplace.
If you have post-termination restrictions on your employment contract, it is vital to understand their implications. It is extremely important that you have these covenants reviewed before signing up to them and again when you are thinking of ending a relationship that includes restrictive covenants. Prevention not cure is the watch word here! Our legal experts can analyse the clauses in your contract carefully, considering if there is a legitimate business interest to protect, and whether the extent of the restraint is reasonable according to parameters established by case law.
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