Reminder about the importance of implementing a restrictive covenant within your business

Alan Price – CEO at BrightHR

April 28 2015

The most valuable asset a business has is sensitive information and data, whether its suppliers, an organisation chart or clients. A restrictive covenant could be protecting you or some other entity, and as the founder of your business, it’s important to get this right first time around. Only last week a friend of mine was telling me a story of how it all went wrong. As the owner of a successful beauty salon, she had introduced her own restrictive covenant policy a number of years ago. To her knowledge her business was secure, she was happy to share her experience, traders, marketing ideas and above all client list! There are a number of key areas that will always need to be addressed in a contract of employment but most importantly, the contract should always include reasonable restrictive covenants so in the event of someone leaving the company, your business is protected against unfair practices such as poaching your clients, key members of your team or your valuable data and intellectual property.  Many businesses do not think this scenario will happen to them, sadly in many cases it does and yet if they had covenants in place it could have help to protect sensitive data. These covenants need to be drafted in a balanced way so as not to stifle competition but to reasonably protect your business.  Restrictions that are too onerous will not be enforceable by the courts but reasonable rules can and will protect your business against the potential for tremendous damage that can be caused by dishonourable former employees. The bottom line is that the effectiveness of these restrictive covenants is up to the courts. But without them you have absolutely no protection and are very vulnerable. It is very much worth the time and investment on your part to implement watertight restrictive covenant as they could save you both a business and HR issue in the long term. Should you need any advice on contracts of employment, or, more specifically, incorporating restrictive covenant guidelines into your employment terms and conditions, then contact any of my team on 0844 892 2772.

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