SIRS has been involved in many different types of investigations over the years. Some, like the tracing of debtors take a short time to produce a result. Others, such as the location of assets on a worldwide basis often longer. One area where there is always extra interest for us is in the investigation of employees, where their employer suspects all is not as it seems.
One example where we assisted an employer was as follows:-
We were instructed in a matter to investigate a senior executive at a company. The HR Director who had instructed us had had it reported to them that this person was spending a lot of time away from the office, but didn’t seem to be contactable at their home office. Emails were also taking longer to be responded to.
Initially we reviewed this person’s Directorships and carried out a full background profiling report on the individual. It was found that they had a listing for a company with their son. It was also in the same line of work as his current employed job. This was in contravention of his restrictive covenant within their contract of employment. We then subsequently undertook surveillance on this individual and found that he was meeting up with his son to undertake joint appointment to visit clients of his current employers. It was subsequently found that they were attempting to take clients over to their new company.
Restrictive covenants can curtail the activity of employees once they leave a business and help protect your legitimate business interests, if done in the correct way. However, the default position is that the implied terms employees must abide by during their employment do not usually survive termination of employment. Explicit contractual terms that restrict employee activities after termination are void for being in restraint of trade, unless you can demonstrate:
- a) a legitimate proprietary interest, which it is appropriate to protect; and
- b) the protection you seek is no more than is reasonable, considering the interests of the parties and the public.
By including specific restrictions from the outset in a written employment contract, it makes clear to both parties what is restricted, how long the restrictions last and in the exact circumstances they apply. If drafted precisely and in accordance with employment law, this can help to protect your business from a former employee using confidential information, strategic plans, business contacts or other sensitive information in a damaging way once the employee has left your employment.
Restrictive covenants might also prevent employees from joining competitors and prevent competitor employers from hiring restrained employees. This is due to the risk of the courts enforcing post-termination restrictions against both the new employer and the former employee.
In summary, getting post-termination restrictions right could make a huge difference for the future profitability and security of your business.
Source: Harper James, Solicitors