Is your business properly and adequately protected against your current and ex-employees?

Imagine if one of your key or senior employees left to join a competitor or decided to set up their own business competing with yours?

This individual may know your business inside out and may have good relationships with your clients, employees and suppliers. Unless your business is properly and adequately protected there is a significant risk that a departing employee may take your clients, employees and supplier relationships with them causing considerable damage to your business.

History tells us this happens regularly. One client I acted for lost £2.5m of turnover through having little or no protection in place.

You cannot prevent employees from leaving your business, however you can limit what those employees can do during their employment and after they leave to ensure your business is protected. Your employment contracts and internal policies are your business’s primary line of defence against employees disclosing confidential information or poaching your clients, contacts and employees.

Tightly-drafted and appropriate post-termination restrictions can prevent an exiting employee from immediately working in direct competition with your business, stealing or disclosing trade secrets or poaching your key clients, contacts and staff, all of which could cause immeasurable damage to your business.

Many businesses use precedents obtained from others which have pre-drafted general restrictions in place. This can be dangerous as these restrictions need to be tailored to your business and the individual against whom the protection is sought. In addition many employment contracts are old and have not been reviewed or adapted as an individual is promoted within a business. In order to ensure your restrictions are enforceable they should be regularly reviewed to ensure they continue to be appropriate to the employee’s role and your business, and should be considered and reviewed each time a senior/key person is recruited.

It is not just exiting employees who can cause damage. It is also important to ensure current employees are properly restrained from leaking confidential information to third parties, being engaged in outside businesses, taking your Intellectual Property and/or causing damage during their notice period. This can be done by appropriately drafted clauses within the employment contracts.

Finally, over the last few years there has been a barrage of developments and changes to employment law. These changes have affected the way in which employers are required to handle their internal practices, manage their employees and resolve disputes in the workplace.  For example, some of the particularly important areas of change include the abolition of the default retirement age, anti-bribery legislation, atypical working and pensions.

To help avoid potential liabilities for your business it vital to ensure your contracts and policies are compliant with current legislation and, where possible, best practice.

In conclusion, do you have the best possible protection for your business? Ask yourself:

1. When was the last time your employment contracts and policies were reviewed?
2. Are you confident that your policies and procedures are compliant with recent changes to employment legislation?
3. Is your business adequately protected from the risks posed by employees both during and after the end of the employment relationship?

Putting these measures in place does not cost a lot but could prevent your business from suffering considerable damage.

The Hine Legal team can undertake an audit of your contracts and policies for an agreed fixed fee. We will then provide a report and recommend where we think amendment or improvement is required.

Contact us on 020 3008 5718 or email Nhine@hinelegal.com

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Nick Hine – Hine Legal

 

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