Non-compete clauses, injunctions and breach of covenants

Senior executive employment contracts are usually different from non-executive employment contracts in that they generally include restrictive covenants - often referred to as post-termination restrictions or non-compete clauses. Not surprisingly, both employer and employee desire certain protections and, unlike a non-executive employment contract, both parties have bargaining power.

As Penningtons Manches Cooper acts for senior executives and employers, we can provide a 360-degree perspective on employment contracts. Our employment lawyers specialise in advising senior executives on how to navigate and resolve the complex area of restrictive covenants within their contracts to protect their reputation and future career prospects.

Most senior executive employment contracts contain restrictive covenants that attempt to constrain the employee’s ability to compete with their former employer after they have joined a new organisation. Covenants commonly prevent solicitation of or dealing with former customers, interference with suppliers, poaching colleagues or working for a competitor for a defined period of time. Disputes over the scope and enforceability of such post-termination restrictions are frequent and can often lead to expensive litigation for both employer and employee.

If your former employer believes that you have breached or are about to breach a restrictive covenant, they may commence court proceedings against you which may include seeking an injunction to prevent the breach. However, before commencing injunctive proceedings, it is usual for an employer to have their lawyer write to you requesting undertakings to avoid a claim for an injunction. If you receive such a letter, you should seek expert legal advice immediately.

We can advise on the enforceability of non-compete provisions and other post-termination restrictions and provide pragmatic guidance for senior employees on how to approach such restrictions, including negotiating their scope, agreeing on undertakings and, where necessary, defending injunction proceedings. We also frequently advise senior executives on the redrafting and negotiation of restrictive covenants when joining a new employer to ensure any future moves are not put in jeopardy.

Our employment lawyers work seamlessly with experts in the firm’s other practice areas and we regularly draw on the specialist knowledge of our commercial dispute resolution team who have extensive experience in High Court procedures. All our clients value our expertise in navigating these challenging situations, advising on the best strategy and providing legal and commercially focused advice from start to finish.