Sun, Sand and……….Shockwaves

24th July 2017 | Written by Amy White

It’s that time of year again. The Summer holidays are upon us. You’ve booked your hotel, stocked up on the factor 30 and no doubt hit the gym a little harder than normal in an effort to get your “beach body” ready. Having worked your socks off all year getting your brand new business off the ground, you certainly deserve a break. And now you’ve got a team in place (sales – tick, marketing – tick, finance – tick) you can rest easy knowing that your baby is in good hands. Or can you?

What happens if, while you’re away, your key staff come up with a plot to leave your business and either join a competitor or set up in competition themselves and then dump their letters of resignation on your desk at 9.00 am on your first day back?

Well, aside from no doubt being somewhat miffed, your legal recourse is dependant on the protections you put in place before you jetted off. All too often, clients tell us they don’t need formal contracts – they trust their core team, they’ve reached a “Gentleman’s Agreement”, a handshake’s enough for them. The problem is that without a clear written contract, in a situation such as that described above, you could find yourself with few options and little in the way of protection.

The basic position in law is that, while during employment an employee cannot work in competition with their employer (an implied term), when they leave, that restriction falls away and all that remains is a prohibition on disclosing ‘trade secrets’, a concept which only protects an employer’s most secret information. If you have a clear written contract to rely on, you can seek to enforce much wider confidentiality provisions and even covenants which restrict how an ex-employee can operate (with regard to soliciting and dealing with clients, operating in competition and poaching staff) for a specified period post-termination. Conversely, without one, you could find your long awaited holiday costs you significantly more than that last minute flight.

For more information in connection with drafting employment contracts, confidentiality provisions and restrictive covenants, please contact Amy White on amywhite@rixandkay.co.uk or Miranda Martin on mirandamartin@rixandkay.co.uk.