Enforcing Restrictive Covenants

Your employment contract might well contain restrictions, that prevent you from taking certain steps after employment has terminated. These restrictions are known as restrictive covenants, and further information may be found here: Restrictions in employment contracts.

If your former employer believes that you are competing, or preparing to compete, then you could face a legal claim.

Your former employer is likely to start the legal process with a ‘cease and desist’ letter. This will:

• outline the restrictive covenants that your former employer says still bind you, and which it is alleged you have broken.
• detail the outcome of your employer’s investigation into your alleged wrongdoing.
• demand undertakings, which might include reaffirming your contractual obligations.
• make it clear that if you do not comply with the demands, further action will be taken in the High Court.

Where you have been accused of misusing confidential information, the cease and desist letter might demand ‘delivery up’ of documents, as well as your computer equipment, and electronic storage devices.

If you do not give the requested undertakings, or if you fail to properly engage with your former employer, then further action could be taken. Normally, this would involve issuing proceedings in the High Court. A number of claims could be made. These include:

• an application for an injunction. This is a Court Order that you do not do something. For example, contact your former employer’s customers, or use confidential information. Injunctions are interim (temporary), or permanent.
• a claim for damages. This is a Court Order that you pay your former employer money, to compensate for breach of contract.
• a claim for account of profits. This is a Court Order that you pay for your former employer, the profits that you have made, as a result of your breach of contract.
• a claim against a third party, who might be involved, such as your new employer.

If you receive a cease and desist letter, then it is important to obtain legal advice as soon as possible. If it is possible to reach a resolution before court proceedings are issued, then this may reduce the overall legal cost.