KEEBLES LLP HERE TO HELP Restrictive Covenants


Each issue, Yorkshire law firm Keebles LLP shares its key advice for care home professionals. This time, Andrew Broadbent, Keebles’ restrictive covenants expert, tells you everything you need to know to safeguard your care home business.


It is vital that care home owners identify and


secure experienced and talented employees in key management positions, in


order to ensure their homes are operated successfully and safely.


This is why we at Keebles advise that restrictive covenants are included within employment contracts, to safeguard the business should that employee leave in the future.


When taking steps to include, and subsequently enforce, restrictive covenants within an employment contract, you need to consider several key factors so that those restrictions don’t represent restraint of trade.


A contractual term that restricts activities aſter employment has been terminated will be classed as void for being a restraint of trade, unless the employer is able to demonstrate that the restriction is reasonable and protects their legitimate business interests.


Rulings on restrictive covenants are inherently difficult to predict. Each case largely varies on the individual facts, but there are certain factors that will give you a useful steer of whether the restriction in question will be enforceable.


Restrictive covenants in employment contracts are usually viewed more strictly than they would be in a freely negotiated commercial agreement.


The restrictive covenants must be reasonable in respect of a range of commercial factors, including duration, geography and whether the restriction is industry-specific or covers numerous industries.


They must relate to a legitimate business interest and protect a legitimate propriety interest such as confidential information, protecting of workforce or safeguarding connections with residents etc.


Restrictions cannot be added solely to prevent competition. It is important to consider which restrictive covenants will be required for particular employees, and it stands to reason that an individual who is acting in a management role and/or has access to sensitive/commercial information is likely to warrant stricter restrictions than a more junior employee.


It is also oſten the case that, over a period of time, an employee may work their way up into a more senior position


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and it is therefore important to monitor whether restrictions should be amended to reflect this periodically. Keep in mind that restrictive covenants need to be reasonable at the time they are entered into.


If they are not reasonable at the outset, they will be considered void and cannot be resurrected. Covenants should not therefore be draſted with promotions in mind, as they are likely to go beyond what is necessary at the time that they were entered into.


Finally, you can have the best draſted restrictive covenants in the world but, if they are not properly incorporated into the contract of employment and agreed by the employee, they will be of little or no help. Be careful with including restrictive covenants in staff handbooks or side letters; it may be difficult to argue that such covenants are applicable to specific individuals and/or that there was sufficient consideration to make the covenants legally binding.


Although it is obviously beneficial to ensure restrictive covenants are enforceable and are updated regularly, disputes can still arise when a key employee leaves a care


"You can have the best drafted


restrictive covenants in the world but, if they are not properly


incorporated into the contract of employment and agreed by the


employee, they will be of little or no help."


home business. If that happens to you, we can help. We have enormous experience in dealing with disputes arising from restrictive covenants on behalf of both care home owners and their employees.


www.keebles.com www.tomorrowscare.co.uk


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