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How effectively can an English employer restrict an employee’s activity after the employment ends?

Essay 2009 7 Pages

Business economics - Law

Excerpt

If an employee change his emploeyer, there is the danger, that the ex-employee takes the company secrets and other interesting and confidential information with itself away to his new employer, who is very likely a competitor of the exemployer or the ex-employee uses his knowledge to settle his own undertaking and than competes with his former employer.

So there is a big interest on the part of the ex-employer to restrict the possibilities of the Information transfer to the competitor by the ex-employee. It is arguable how and in which complexity it succeeds, in relation to English law and to European law. This should be illustrated in the following.

It is not easy to restrict an ex- employee on that way, that is not a to wide restriction, because a restriction which is to wide and not reasonable is enforcable and could become void. That’s why it is very important to proof verry seriously what for a restriction is possible in your case and about this reason you must think about, which secrets and legitimate interests you want protect and which of theese are realy protectable. In english law different things may be protectable. There are: Trade secrets, confidential information, Trade connections and Workforce which could be protectable.

Trade secrets could be different things, you cannot concluding name what precisely trade secrets are. For Example, a formulae or a special method of construction is a trade secret, as long as it is not published by the employer. A trade secret is an information which could cause real harm, if it is betrayed to a competitor.1

The definition of confidential information is even more difficult than the definition of a trade secret. The problem is, that there are information in the employee`s mind, you can`t delete if the employment ends. And the main problem is, to differ from the general knowledge of the employee, which information is confidential and which are not confidential. This depends on lot of things, first of all that the information are realy confidential and not published. But there are also confidential information which are definitely such, like sources of supply, price lists and lists of customers.2

Trade connections are very important in doing trade and it is a field which is most difficult to protect, because you cannot avoid with covenant restriction, that your ex-employee entice your costomers away if he had no considerable contact to them during the employment. That’s the reason why an employer cannot restrict his employee only to avoid that he becomes a competitor.3 Workforce and their skills are imprtant for the employer and its undertaking, he has a big interest at it, that the ex-employee don’t can try to headhunt his own staff. But it is not so easy how he can avoid this. There are different things which you must consider if you want to make an “non-solicitation of staff” covenant unenforcable.4

Everey case depends on its own facts and circumstances, that is the reason why you cannot say clearly under which facts a restriction covenant becomes invalid. In general you can say, that the employer has no chance to restrict his ex- employee effectively, if he has no legimate interests which need protection and it is similarly important that the restriction is reasonable in relation to the geographical limit, the period and the activity which should be avoid. As employer you must particularly consider, the longer the period of the restriction is, so smaller must be the geographical area and the more limited is the restriction. See for example the case: White v Francis 1972 3 All ER 857, CA, in which a hairdresser agreed not to work within ½ mile for 12 months, with the aim, that the ex-employee did not unfairly steal his former employer's customers. This clause was upheld as valid, because the combination from the period and the geografical area was adequat and not to wide.5

As an employer you must also consider, that the position of an employee is important to the largeness of the restriction. If your employee has a high status in your company, you must restrain him more than an assembly line worker with no authority. But there is the Problem, it is very difficult to find an adequat restriction which is for both, employer and employee acceptable. That’s why in most cases the only secret way to avoid that your trade secrets are played of against yourself, is to avoid that your ex-employee competes with you and Covenants in which the employee is restricted, in working for a competitor or establish it’s own undertaking in the same branch, are allowed.6

[...]


1 Harvey on Industrial Relations and Employment Law, Division A Contracts of Employment , 8. restraint on competition,690, Page 1.

2 Harvey on Industrial Relations and Employment Law, Division A Contracts of Employment , 8. restraint on competition,694, Page 3.

3 Harvey on Industrial Relations and Employment Law, Division A Contracts of Employment , 8. restraint on competition,708, Page 5.

4 Harvey on Industrial Relations and Employment Law, Division A Contracts of Employment , 8. restraint on competition, [710-715], Page 5- 6.

5 Harvey on Industrial Relations and Employment Law, Division A Contracts of Employment , 8. restraint on competition,716, Page 6.

6 Harvey on Industrial Relations and Employment Law, Division A Contracts of Employment , 8. restraint on competition, [719], Page 7.

Details

Pages
7
Year
2009
ISBN (eBook)
9783640519200
ISBN (Book)
9783640520701
File size
407 KB
Language
English
Catalog Number
v141955
Institution / College
Schmalkalden University of Applied Sciences
Grade
1,7
Tags
English

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Title: How effectively can an English employer restrict an employee’s activity after the employment ends?