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in deciding the time period of the restriction. So, a covenant cannot last for an indefinite period of time. Even where there is a time period, such as six or 12 months, this might be inappropriate if there is no legitimate business interest to be protected. Similarly, any geographical area which applies must be reasonable. This is often relevant where a business operates within a particular area. And there is a risk posed by an ex-employee working in the same area. However, such clauses are not always enforceable.
It might be legitimate, for example, to restrict an employee from working within a short distance of your offices. But if they are home-based, for example, this might be inappropriate and make the clause unenforceable.
Also you need to impose the right level of restriction, bearing in mind the employee’s role and status within the company. For example, office-based admin staff might be less of a threat than an account manager who has frequent, regular contact with clients.
In terms of both clients and prospects, it may be difficult to enforce a covenant where the client or prospect came to the business because of a personal connection or the personal qualities of the ex-
employee.
A large number of legal cases have arisen on the wording of restrictive covenants. Although earlier cases are used to reach a decision, each case is decided on its own facts, giving rise to uncertainty on whether or not a covenant will be valid.
Ultimately, therefore, what the cases do show is that this complex legal area is
fraught with potential dangers. Do not rely on the common law. It is important to have specific, well drafted clauses covering post-termination obligations.
If in doubt, seek advice.
Claudia Gerrard is a legal consultant at Excello Law. You can call her on 07447 985647 or email her at:
cgerrard@excellolaw.co.uk
Supporting the rail industry for over 50 years
Unistrut offers services and products to the entire rail industry from London Underground to National Rail and beyond. Our complete cable management and prefabricated framing LUL approved and Link-up accredited products help you tackle even the most complex challenges and makes us the one stop shop for all your cable management requirements.
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