The most common restrictions are:
- Non-compete – This type of restriction prevents a person from directly competing or working for a competitor, usually within a specific area (e.g. 10 miles of your employer’s premises) and/or for a specific period of time (e.g. 6 months from termination).
- Non-dealing – This type of restriction prevents a person from working for your customers, clients and suppliers for a specific period of time (e.g. 6 months from termination).
- Non-poaching – This type of restriction prevents a person from enticing staff away from the business, again usually for a specific period of time (e.g. 6 months from termination).
Aim of the restrictions
Unless a restriction contained in a covenant protects a legitimate business interest, it is void on public policy grounds as being in restraint of trade. An employer may want to restrict an employee from working in a similar industry to protect their business interests. However, if the sole aim of the covenant is to prevent competition, it is unlikely that the courts will look at such a covenant favourably. In the event an employee is promoted or transferred the restrictive covenants ought to be reviewed to determine their appropriateness. Be mindful of breach of contract issues, arising as a result of the changing terms and conditions.
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