LEGALLY PARKED
RESTRICTIVE COVENANTS End
Many organisations try to protect their
business by controlling what ex-employees can do after an employment contract has ended
Claudia Gerrard looks at restrictive covenants in the parking industry
OF AN ERA L
ike most industries, the parking industry relies upon clients, customers, contacts and prospects as a source of business. As well as that, sales staff, account managers and other customer-facing staff often play a crucial role in developing business. Many organisations try to protect their business by controlling what ex-employees can do after an employment contract has ended. However, it is often the case that such restrictive covenants, as they are called, may fall foul of the law. This is because an ex-employee is entitled to earn a living and restrictive covenants might prevent them from doing so. From that starting point, it is easy to see why covenants cause such complex issues. They have to meet the needs of an individual as well as the business interests of a company. Restrictive covenants can fall into a variety of different categories. It will depend upon the industry, the ex-employee’s position and the form of data that needs to be protected. The main point is that they must protect the legitimate business interests of the business. They can’t be used on a whim or without reasonable justifi cation.
ABOUT the AUTHOR:
Claudia Gerrard is a legal consultant specialising in
parking, security and leasing law.
30 SEPTEMBER 2012
On that basis, a covenant could include non-solicitation of clients or customers. This means the ex-employee cannot actively try to take your customers or clients. Correctly worded, such a covenant would probably be enforceable. Subject to a few caveats. Alternatively, or in addition, a covenant can prevent canvassing of prospective clients or customers. This could prevent the ex- employee from approaching prospective clients or customers your business has been targeting with a view to soliciting business from them. Such a clause is not always enforceable,
Top10tips
1. Consider whether a restrictive covenant is necessary
Avoid a common tendency to use a covenant when it is not absolutely necessary. Courts will take a dim view of meaningless covenants that don’t protect legitimate business interests.
2. Look at the legitimate business interests to be protected Give careful thought to which business interests need to be protected, with emphasis on how much time, effort and money is needed to acquire clients or prospects.
www.britishparking.co.uk
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