Consider this scenario. Your best salesperson, X, resigns. Before long, you notice a drop off in orders from several customers. When you phone a long standing client, they tell you that they are continuing to give orders to X, who is with a new employer (or has set up their own business) because they know and trust him/her.
This is where a contract with a post employment restraint can be useful. Restraints often have a deterrence role, but they are not self enforcing. They are part of a contract, and as with any contract, it is up to you to take steps to enforce it if you want to do something about it. Usually, the first step is to draw the breach to the former employee’s attention and ask them politely to stop their conduct. If that does not work, then you are left with the option of applying to the Supreme Court for an injunction to prevent the ex employee from continuing to breach their contract and/or suing for the monetary loss you have suffered and are likely to suffer.
Whether you are successful in enforcing the restraint depends on how reasonable it is. Restraints which impose a blanket ban on an ex employee working in the same industry, particularly for a lengthy period, are less likely to be enforceable by a court. Commonly, provisions restraining ex employees from dealing with or accepting business from customers with whom they have had personal dealings over a period of time before their employment ended are enforced by courts depending on the length of the restraint. A good restraint will have several potential options for a court to choose from.
An appropriate restraint provision should be a key part of any employment contract where the employee is dealing with customers. You can find further information on our website or please contact us if we can be of assistance.