- The restriction protects a legitimate business interest such as confidential client contract information, details of suppliers, the stability of the workforce etc. and crucially,
- it is reasonable in its restrictions and is specific to the interests listed above.
Aspects to Consider when Putting Restrictive Covenants in Place
- The duration of the restriction. As a rule of thumb, anything over 6 months is often likely to be too onerous and therefore unenforceable. If an employee has a strong relationship with a client, can someone else create a relationship with that client for the business within 3 – 6 months in order to protect the business?
- The area of the restriction. This wholly depends on the business. It is possible to have a global restriction in some industries, however, in others such as hairdressing, the restriction may only be valid if they work within a few streets of your location. Even a 1 mile radius could be unreasonable if that means they cannot work in the same city, without good reason.
- The work which is restricted. What aspect of their work that you want them to not be able to do is an issue which needs to be considered. A business needs to consider what the actual competing roles are that they want to restrict, and include these specifics in the clause. To ban an employee working for another business in ‘any capacity’ will almost always be unenforceable as too wide and vague.
- Competitors which you wish to be included. To take the hairdressing example, state the specific local competitors that you do not wish a former employee to work at for a period of time. Not all hairdressers in the area, just direct competitors. If the clause names those specific 3 or 4 firms, then it is more likely to be an enforceable term or clause than if you state any hairdressers within the town.