Unless you have been living in a galaxy far, far away, I am certain that you will have seen the latest Star Wars film. For most of you, you will be aware that ‘Finn’ does something that has never been done before at the beginning of the movie – he leaves his employment as a Stormtrooper with the First Order to join the Rebel cause. After training Finn for his whole life, the First Order might be a little peeved to discover that he just upped and left. They would be even more annoyed to learn that, post-employment, he joined their arch rival and fierce competitor. But is there anything the First Order could have done to prevent this from happening?
The answer is yes, it is possible for an employer to restrict where an employee works after leaving their employment. This does however have to be expressly stipulated in the employee’s contract. Such a clause will become active when an employee’s employment comes to an end. Although he did not expressly state he was leaving, Finn’s actions could be interpreted as an implied resignation. This would effectively bring his employment with the First Order to an end. In fact, it should have been obvious when Finn took a light sabre to his former colleagues that he had no intention to return to work. The First Order could have sought an interdict (or injunction) from the courts preventing Finn working for someone in direct competition to them.
The problem with restrictive covenants is their enforceability. How do you restrict their activities whilst they are not under your employment? How can you be aware of what they are getting up to? It is important that all contract clauses relating to restrictive covenants are reasonable in both the type of post-employment activities which are affected and their duration. We are more than happy to provide some Yoda-like guidance on any such contract clauses you are contemplating.
As well as putting restrictions on where employees can work after they leave their employment, an employer may put other restrictions on a departing employee. For example confidentiality clauses should prevent a leaving employee from unveiling any trade secrets. Finn was found to be blabbing about all kinds of First Order secrets throughout the film. This could have been prevented had the correct contract been put in place! Again there will be issues of enforceability, but we would be more than happy to give you advice on how to enforce such clauses.
Don’t wander into the Dark Side unnecessarily – let us at Blackadders show you the Light on restrictive covenants!