How do you protect sensitive information when an ex-employees leaves your employment to join a competitor? Let me try and explain. Whilst you cannot stop employees from leaving your employment, you can take certain steps to ensure that your sensitive company information is protected when they do leave. You will need the employee’s agreement to do this if they did not already agreed to be bound by your terms when they started employment. The most appropriate document to use in this situation is a restrictive covenant.
They are put in place mainly to safeguard the employer’s interests in terms of protecting the sensitive information that the employee would have been privy to as part of his/her job which is integral to the employer’s company. Such information is considered invaluable to the success of the company and employers often want to take measures to prevent that information being used to their effective detriment by individuals once they are no longer employed by them. There are some main areas that restrictive covenants cover and these are: “non-solicitation”, in which the employee is prevented from approaching your current clients or prospective clients; “non-competition” where the employee is prevented from conducting the same business, either on their own account or as part of a competing business in the industry in which you operate; “non-dealing”, which is similar to non-solicitation but prevents the employee from dealing with the employer’s clients regardless of who initiated the contact between the parties; and “non-poaching” where the employee is prevented from poaching employees of the employer.
Restrictive covenants need to be reasonable in their terms otherwise a court may deem that it is void and cannot be enforced.
If a restrictive covenant is not already part of the agreed terms of employment between you and the employee, you will need to incorporate it by agreement. This can be a tricky process at this stage of employment so it may help if you offer an incentive.
You can enforce a restrictive covenant though the courts if it is alleged that the employee has breached it and you should be able to show that his company has suffered financial loss from the breach.