Childcare Counsel - post-termination restrictions
Caroline Robins
Monday, May 14, 2018
Our resident employment lawyer Caroline Robins, principal associate at Eversheds, answers a question about restrictions placed on someone leaving a job
I’m a manager and thinking about leaving my job with a nursery chain. However, my contract states that, on leaving my post, I can’t work or even ‘engage in any business’ which is in competition with my current job within a five-mile radius of the company premises. If I take the ban literally, this means I can’t work within a 200 square mile area, as my current organisation owns several settings. I would have to relocate to get another job. Is this legal? What can I do?
It is lawful for a nursery to protect its legitimate business interests through the use of post-termination restrictions in contracts. This would include clauses to protect against, for example, use of the nursery’s confidential information or poaching of customers and staff.
However, post-termination restrictions will only be enforceable to the extent that they are reasonable and go no further than is strictly necessary. A restriction that seeks to prevent an individual working for any competitor within a wide geographical area will be difficult to enforce and may be deemed void as a matter of public policy.
I suggest checking the precise wording and associated definitions of the restriction. For example, is “company premises” defined as all company premises of the nursery chain, or just the particular setting you are working at? Further, is the restriction limited in time? If the drafting of the restriction is too wide, ambiguous or otherwise fails to limit the restriction to what is reasonable, the restriction may not be enforceable.
The enforcement of restrictive covenants in the courts is often cost-prohibitive, although such action is often threatened. Often the parties deal with the matter by agreement (often through signed undertakings), rather than court action.
In the event that the restriction is potentially enforceable, it may be possible for you to agree that the restriction is waived or limited, in exchange for an agreement by you that you will not, for example, make use of the nursery’s confidential information.
