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Can you genuinely restrain employees after termination?

Employment Law

Yes, sometimes when it is appropriate and the contract is well drafted.

Restraints are commonly included in employment contracts.  When are they useful?  Who should they apply to?  Restraints are not appropriate for employees who are unlikely to threaten the business’ legitimate interests.  For example an administrative employee without access to business know how or confidential information, or wait staff, or a warehouse worker.  It is generally inappropriate to seek a restraint from these employees when hiring them.

The Courts will not permit the business to restrain all employees from ever working locally again.  This is against the public policy behind the law.  The policy is that everyone should have the chance to earn a living by using their knowledge, skills and experience to work.

On the other hand, it is often appropriate for the business to include a restraint clause for executive employees with intimate knowledge of the business, who can threaten the business’ legitimate business interests.  What does this mean?  The employment contract can aim to prevent employees from unfairly using their knowledge of the business and contacts formed to unfairly compete and steal the business’ best clients or customers.  The purpose of restraints is to allow the business a reasonable opportunity to replace the employee after they leave and rebuild the relationship severed.  The business should carefully consider which employees it should restrain on termination of their employment.