Restrictive Covenants

The success of an organization and its capacity to remain competitive is largely based on its ability to deliver superior services, bring unique value to customers and ensure their retention especially from predatory competition and sometimes from “internal enemies”. To all intents and purposes, trade secrets, confidential information, sensitive data, customer/client list, marketing plans, upcoming business launch and special business programs are tools that require judicious protection.

While it is easier to safe guide these secrets from people that are external to the organization, how do you prevent your employees especially those whose services have been terminated or that left on the basis of resignation from selfishly disclosing such information to unauthorized persons, converting them for personal use or sharing such with a new employer/ competitors?

Does the law permit an employer to exercise control over a former employee? If it does what should be considered a reasonable restriction? What are the options available to employers in the protection of vital information that an employee is privileged to have by reason of their contract of employment?

WHAT IS A RESTRICTIVE COVENANT?

A restrictive covenant in relations to the employment agreement is a contractual clause which provides for a binding, mutually agreed restraint on the part of an employee from directly competing with his or her employer or be engaged by a company or organization that is in direct competition with his or her former employer.
Fundamentally speaking, restrictive covenants are time-bound, geographically limited, and reasonable and in most cases, they must satisfy the consideration criterion in which the value of what the employee is being asked to give up must be relatively equal to the benefits that he receives or, gain.

CATEGORIZATION OF RESTRICTIVE COVENANTS

There are three known restrictive covenants common to employment relationships and these includes:

A NON-COMPETE CLAUSE OR AGREEMENT. This is commonly found in a contract of employment in which an employee agrees not to compete with his employer while in the employment of the employer and after his exit for a reasonable length of time within a geographical define space.

A NON-DISCLOSURE UNDERSTANDING OR TREATY. This is a restriction placed on an employee from engaging in an unauthorized disclosure of business information, trade secrets to anyone outside the business.

A NON-SOLICITATION AGREEMENT. This agreement places a restriction on an employee in using company data such as client list, customers details and other privileged information outside the employer interest.

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BENEFITS OF RESTRICTIVE CLAUSES IN EMPLOYMENT AGREEMENT

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