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Restrictive Covenants

Restrictive covenants, also known as post-termination restrictions or non-compete clauses, are terms in employment contracts or other agreements which seek to restrict an individual’s ability to compete with their employer’s business once they have left that employment.

The Employment Law specialists at Banner Jones are able to advise you on any issue that may arise as a result of restrictive covenants in a employment contract, shareholder agreement, partnership agreement, settlement agreement, business/share sale agreement or consultancy agreement.

The law relating to restrictive covenants is complex and ever changing, with employers having the ability to seek injunctions against former employees, as well as damages for any loss they incur as a result of any breach of an enforceable covenant provided that they can show that they have a legitimate business interest to protect and that the restriction goes no further than necessary to give them that protection.

As a general rule, non-competition clauses that prevent an employee from competing with their former employer’s business are unenforceable because they are viewed as unlawful restraints of trade, whilst non-solicitation or non-dealing clauses are allowed as they are designed to go no further than reasonably necessary to protect the employer’s legitimate business interests. However, this varies from one sector and industry to another and one role to another. You should therefore seek expert legal advice about the wording of any restrictive covenant in light of the sector or industry your business operates in.

We can help you draft restrictive covenants which are appropriate for your business sector and the status of the employee who is entering in to the contract to ensure that the restrictions are likely to be enforceable in light of the limitations set out in case law.

Frequently Asked Questions

Do we have to do anything else in our recruitment adverts?

You need to be able to justify if you are asking for certain levels of experience. Advertising for a bus driver who is safe and has had previous experience is one thing advertising for a bus driver with 10 years’ experience is another. The first option leaves your job advert open for all ages to apply. The second rules out individuals who may be in their early twenties.

 Other points to consider when recruiting new employees:

  • Ensure whoever is interviewing potential employee’s scores interviewees on their skills and competencies as opposed to their age.
  • Although they are not discriminatory themselves consider removing any reference to age on your job application forms.
  • Don’t ask a potential employee for a physical fitness test unless you require them. 

Once you have selected an appropriate employee ensure managers and staff are trained to monitor and avoid any discriminatory behaviour. Also make sure it is clear within any policies you have that discrimination in any form is unacceptable. Ensure managers are fully trained in diversity issues and that they are able to deal with discriminatory issues that arise within the workplace.

Do we need to worry about these requirements if we employ people in their 50’s and 60’s?

Yes you need to be aware of these requirements if you employ anyone of any age. They affect every area of employment as well as the recruitment and selection process. The requirements not only make it unlawful to discriminate on the grounds of age but also harassment whether it be intentional or unintentional or to victimise an individual. 

You need to worry not only about your own actions but also your fellow employees who must be discouraged from making offensive or unkind comments about age or anything in between.

 As with other areas of discrimination if your employee can demonstrate that there has been a difference in treatment which is due to discrimination it is solely down to you the employer to show otherwise or for you to prove that you have done everything in your power to stop such discrimination. There are no limits to discrimination awards and often they include an aspect for suffering, failure to do so can be expensive. 

 

How does age discrimination requirements effect the recruitment process?

When you are recruiting employees you need to ensure you are not discriminating for or against anyone due to their age. This means you cannot advertise specific age requirements in any of your job adverts unless you can justify them.

Our employees are all in their early twenties if we employ someone in their sixties they would be out of place. Do we have to hire someone of this age?

If you interview someone in their sixties and they turn out to be as good or even better than your current employees in their twenties you should not let their age be a determining factor as to whether you hire them or not. Since October 2006 it has been unlawful to reject anyone for an interview based on their age. There is not a lot employers can do to control the age of their workforce therefore you would potentially have to recruit someone in their sixties even if you have a younger workforce.  

What are the conditions of age discrimination?

In 2011 legislation new legislation was introduced making it unlawful to treat anyone differently due to their age except if it could be justified or falls within one of the exemptions to the law. The retirement age of 65 has now been phased out meaning employers can now only forcibly retire workers if it can be justified.  

 

What year did the requirements of age discrimination come into effect?

The Employment Equality (Age) Regulations came into effect in October 2006. The retirement age of 65 was phased out between April 2011 and October 2011.

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Katie  Ash
Katie Ash
Head of Employment Law
Sara Ellison
Sara Ellison
Sara Patel
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