In these financially challenging times, looking for ways to save money is common. Whilst it may be tempting to deal with legal matters yourself – perhaps with the aid of the internet – the absence of proper legal advice frequently costs a lot more in the long run.
Over the coming months, Aidan Squire from TM Law will explain the pitfalls and risks of the DIY law approach regarding aspects of employment law, leases, and personal advice.
In this first instalment, he looks at Employment Law and, specifically, the use of restrictive covenants.
Regarding employment law and employment contracts, there is a statutory regime that restricts what you can put into a contract of employment. Alongside this, the interpretation of contract clauses has developed substantially over the past 50 years, meaning that the Courts can override certain contractual terms if they fail in a test of what is considered ‘fair or reasonable’.
This is especially the case when it comes to the use of ‘restrictive covenants’ – clauses within a contract of employment that restrict or limit an employee in certain ways.
An employer may include restrictive covenants in a contract of employment to protect their business by preventing an employee from doing things that could damage it, such as targeting clients or poaching staff after they leave. However, the drafting of restrictive covenants in a contract of employment must always be done with the greatest care and consideration as the law requires them to be ‘fair and reasonable’ towards the employee. This means that they cannot be overly restrictive, prevent an employee from getting a job in the future, prohibiting them from working in a specific industry or sector, or be too wide reaching from a geographic and duration perspective.
If a contract of employment is subsequently challenged in court, the Court will balance the parties’ respective interests but also consider the fairness and reasonableness of these clauses. If the Court considers them unfair or unreasonable towards the employee, it cannot rewrite the contract or clause. Instead, it will simply strike them from the contract in their entirety. As a result, even if an employee is happy to accept restrictive covenants when they sign a contract of employment, if they are not carefully considered at the outset and are not reasonable or fair, they will fail to provide the employer with the protection they envisaged they would.
Fortunately for TM Law’s clients, we frequently advise on the use of restrictive covenants in contracts of employment and consider a variety of factors when doing so. This can include the nature of a client’s business, how long they could fairly and reasonably expect to be protected by a restrictive covenant, and the geographical area in which a business operates.
As with all contracts, it is only when a contract of employment is challenged in law that its quality, or lack thereof, is exposed. At TM Law, our advice, guidance, knowledge, and experience in employment law helps ensure that restrictive covenants in a contract of employment always achieve what they set out to do; protect our client’s business whilst being reasonable and fair in the eyes of the law.
As with many things in life, you can try the DIY approach to save money. However, when it comes to protecting your business, using TM Law is always money well spent.
For further information, please call Terry or Aidan on 01702 568220 or email them at info@tm-law.co.uk. TM Law Ltd is a member of the Solicitors Regulation Authority, the regulatory body for solicitors in England and Wales.
