It is not unusual for people to usher in a new year with more than a glass of their favourite tipple. The turn of the year is often coupled with a resolve to move onwards and upwards. For many people, that means a change of job and a new employer. In the dynamic world of marketing and sales, client relationships are the lifeblood of any business. Those relationships are often reduced to databases carrying sensitive and confidential information, which many employees have access to. A recent High Court case serves as a timely reminder that if you want to protect those hard-won contacts, you must have some control over your employee’s activities once they have left your organisation. In most cases, employees will be required to sign contracts of employment which incorporate post-termination restrictions or restrictive covenants. In the case of FW Farnsworth Limited v Lacy, the High Court held that Mr Lacy was bound by restrictive covenants in a contract of employment that he never actually signed.
Mr Lacy contended that whilst he received the new contract upon being promoted by Farnsworth, he put the document away in his drawer and then apparently forgotabout it. The contract remained in his desk unsigned. Mr Lacy’s mistake was to apply for permanent medical insurance, a benefit provided under the new (unsigned) contract - but not under his old, pre-promotion terms and conditions. And on that basis, the Court found that he had accepted the new contract by availing himself of it’s benefits. Sadly for him, the new contract also prevented him from working for a competitor after he had left Farnsworth. So where does this leave us? Well, a new year gives you the chance to identify possible areas of risk and take steps to protect your business. Starting with your own recruitment drive, ensure that new employees are signed up to properly drafted restrictive covenants. Just as importantly, make sure that your new recruits disclose any existing restrictions from their previous employment. Disgruntled former employers will consider the possibility that you may have induced your new employee to breach existing restrictive covenants.
Don’t forget those crucial client databases, fee structures and marketing strategies, the most sensitive information you hold. You must ensure that employees are bound by post-termination confidentiality clauses and that this type of information is held securely. And what to do if one of your employees decides to seek out that supposed greener grass in the New Year? If you identify any risk, act quickly. Make use of garden leave clauses to minimise their contact with your clients. Be careful - if the employer breaches the contract (for example by placing an employee on garden leave with no contractual right to do so), it may lose the right to rely on post-termination restrictions. If you decide to go legal, applications for injunctions must be made expediently. Gathering evidence is a mammoth task. Solicitors, barristers and the Courts are required to act with haste. So make sure you have a lawyer who won’t be off skiing. I don’t ski by the way, it’s back to the office for me… Nick Wilson is responsible for the employment law service at Crooks Commercial Solicitors Limited, a specialist commercial law firm with experience in many sectors including recruitment. Contact Nick on 01924 669159, email at firstname.lastname@example.org or www.ccs-law.co.uk.