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A New Year’s resolution

Ensuring you have tailored and up-to-date contracts of employment will help businesses in 2014 avoid legal pitfalls, says The HR Dept, if any member of the team leaves and tries to poach business.

The HR Dept is urging small business owners to review their contracts of employment to ensure that post-employment restrictions are reasonable and robust in order to protect their businesses.

In often nightmare scenarios for small business owners, where a key member of the team leaves to join a competitor or to start up a similar business, a specific, personalised and strong restrictive covenant can help. Restrictive covenants can stop the ex-employee touting, soliciting or securing potential or existing clients for a period of time, allowing the original business to re-cement their relationships.

Any restrictive covenant should be drafted to that specific business, seniority or influence of the employee, and the nature of the industry.

Enforcing restrictive covenants and practices can be an expensive exercise. However, for certain businesses and situations, the cost of not enforcing it may be worse or financially more crippling because of the potential loss of business.

The HR Dept says: “A New Year’s resolution should be to take a good look in the employee files to make sure key members of staff have up-to-date and relevant terms and conditions. Generic restrictive covenants and practices may look good on paper threatening the world to end if someone poaches a client once they have left, but it needs to be clear and fit the business specifically.”

Time changes and people do move on, but businesses should be able to protect the order book. However, first it has to be written down in a contract of employment.

Date:
Wednesday, November 27, 2013