Restrictive covenants in employment contracts are essentially conditions that restrain an employee’s right to engage in certain activities, sometimes during his/her current employment, sometimes even after it has been terminated. Employment law takes an exacting approach to restrictions placed on employees and tends to limit their lawful application.
However, if they are drafted no more widely than necessary for the purpose of protecting the employer’s trade secrets and confidential information, its connections with clients and/or the stability of the workforce, these restrictive covenants may be legally enforceable.
The more senior (and thus more informed or influential) the employee, the more likely the courts will consider a restriction on that employee’s potentially conflicting activities to be reasonable.
Classic and common examples of restrictive covenants during and after employment include the agreement that the employee will not solicit the business’s customers or that they will not have direct contact with former clients. Sometimes covenants also prevent an employee from working for a competitor for a period of time after the employment ends – as this is more onerous the courts are less likely to enforce it.
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