So, you've built your business from the ground up, grown from strength to strength and now the worst has happened. One of your employees has left and taken your clients or other employees with them. Being in business is tough, so find out what restrictions you can use and when to use them.
There are 4 main restrictive clauses you can use when it comes to employees:
• non-solicitation of clients
• non-dealing with clients
• non-poaching of staff
You may have heard of them before but never really known how or when to use them but they can be vital when things go wrong with an employee.
What to do when an employee takes clients information when they leave
As you may know, data protection is now a pretty big deal and any employee found to be taking confidential information about a client or customer when they leave the company can be met with a hefty £5,000 fine in a magistrates’ court or, in some cases, receive an unlimited fine in a Crown Court. It's pretty serious stuff and unlawfully accessing and using the personal data about customers for their personal gain, can get an ex employee into a lot of trouble, but that doesn't lessen the threat to you and your business unless they are caught.
So, you want to nip this sort of behaviour in the bud and create an iron-clad contract when they first start employment with you. Start by including a non-solicitation of clients and non-dealing with clients clause in their initial contract. Unfortunately, as tempting as it may be, you can't actually add these clauses in automatically to every employees contract, they have to be relevant, so keep this in mind when drawing up the contract.
Next, you'll want to get a policy in place. In this you should reserve the right to look at all incoming and outgoing work emails from their work devices. It's also helpful to have a call recording system for the purpose of training and quality control. By putting these procedures into place, it will hopefully deter employees from trying to pull a fast one.
Once you've got your policy in place, you'll need to look into the contracts of the employees that are up for promotion. If they started as a junior and are now moving into a role where they will have access to vital client information, then you'll want to add the clause in before they sign the dotted line. It's always good to let them know that some aspects of their contract will be changing to come in line with their new role.
What to do when an employee poaches other employees when they leave
This can be a really tricky one. You've finally got a great team and then one leaves taking 3 with them. Well, there's something you can do about it. Legally, you're allowed to add in a restrictive clause. In this case, it would be a non-compete and non-poaching of staff. Again, like the non-solicitation of clients and non-dealing with clients clause, it has to be relevant to the individual employee and not a blanket clause that you use for everyone.
Restrictive covenants act as an invaluable safety net to business owners when used in the right way. Some business owners have been met with court action when the clauses have been used to excess. It's something that the courts are really trying to stamp out so be aware of being too restrictive when it comes to your employees and always make sure that you seek specialist advice to get it right the first time.
These restrictive clauses may well work in your favour, but always remember, they can work well for the employee too. If you terminate a contract early, without notice or in breach of its terms, then the employee is no longer tied to the restrictions of their contract.
So, it's time to get a little proactive. Get help and advice from someone who is legally qualified, draft up your policies and contracts and save yourself from a big business headache in the future. A little work now will be invaluable in the long run.