Businesses advised to review contracts ahead of Government changes to employment rules

Staffordshire solicitors Bowcock & Pursaill are advising business owners to review their employment contracts ahead of Government changes which specify where and how employees can work when they leave a business.

The consultation has been sparked by concerns that non-compete clauses, often written into employment contracts and used to prevent a former employee from setting up as, or working for, a competitor, are acting as a barrier to innovation.

The possible removal of these legal protections is already causing alarm among some experts, who argue an employer must have the right to protect their business and to take away that protection could be more damaging to entrepreneurship than a properly drafted non-compete clause.

Tim Wolley, a Partner and employment law specialist at Bowcock & Pursaill Solicitors who have offices in Leek, Hanley, Uttoxeter and Eccleshall, said while non-compete clauses could delay a new start-up business they weren’t necessarily an unreasonable precaution.

He said: “Such clauses have become more and more common in employment contracts as the labour market has become more fluid and people are more likely to work for several different employers.

“However, non-compete clauses are only enforceable if they go no further than is reasonably necessary to protect an employers’ legitimate business interests.

“You could equally argue that no one would start a business or employ people if there was no means of preventing your staff from leaving and setting up in unfair competition using assets from your business.

“The courts are capable of balancing the competing interests of employer and employee, but it’s not yet clear whether the Government is only looking at non-compete clauses or also other types of restrictive covenant.

“Whatever the outcome of this consultation, employers are best advised to keep their employment contracts under review and consider the extent to which their business interests are protected from a departing employee.

“This is a developing area and employers may wish to restrain a departing employee from using new methods of poaching customers, such as updating personal social media accounts with new contact details where customers are likely to follow the employee.

“I have no doubt, particularly among larger businesses, that any changes in employment law will make employers consider other means of protection, including non-solicitation, non-dealing covenants and sensible periods of garden leave.”

The consultation is the latest by the government in its drive to create an innovation plan which will make Britain the best place in Europe to start up a new business.

Any employers concerned about the change and wanting further advice about their employment contracts can contact Tim Wolley on 01782 200007 or email him on tw@bowcockpursaill.co.uk

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