The region’s employers are being warned they need to tread carefully when taking on new staff who may still be bound by contracts with their former employers.
The alert has come from Sally Morris, one of the West Midlands’ top employment lawyers, who says businesses recruiting someone from elsewhere could find themselves paying hefty damages if they have not checked thoroughly for the effects of restrictive covenants in contracts.
Some employers require their staff to agree to certain conditions, such as keeping confidential information or not poaching customers, even if they leave and go elsewhere. But if they breach those covenants, it is not just the employee who could find him or herself in trouble but their new employer as well.
“It still surprises me that despite a number of high profile cases, many employers in the region still don’t protect themselves and take early advice if they are intending to recruit a future employee is who bound by restrictive covenants.” said Ms Morris, partner and head of employment at law firm mfg Solicitors.
“Restrictive covenants are designed to limit what an employee can do competitively if they move on. The covenant could cover a multitude of issues and may prevent someone from dealing with certain customers or utilising databases in order to stop them using vital information.
“But businesses are wrong if they think it just affects the employee. There has been a recent example of a UK-based company which was held jointly liable for breach of contract because a new employee had copied his old employer’s entire accounting database and used that information to solicit business. That isn’t a situation business leaders here in the West Midlands want to have.”
Ms Morris continued: “There have been a number of cases in the past 12 months where businesses could have side-stepped any contractual problems by not leaving things to chance and taken legal advice at an early stage.
“I am determined that firms here in the West Midlands don’t fall into that trap and a situation which can have negative consequences for their reputation and bank balance.
“If businesses are intending to employ someone who has restrictive covenants in a former employees’ contract, they need to check exactly what they are getting themselves into. Simply waiting for them to work their notice or complete gardening leave does not mean they are in the clear.
“The result of not checking can result in a significant business headache and be very costly for everyone involved.”
Employers looking for advice on contract covenants can call mfg Solicitors on 0845 55 55 321 or email Ms Morris and her team through firstname.lastname@example.org
Sally Morris is a regular media spokesperson on a variety UK employment law issues. She also hosts popular employment seminars attended by businesses from across the region.