All businesses and organisations seek to protect their intellectual property, client base, and market share within their geography; in other words, protect their interests, and those of their shareholders and employees. One such way to achieve this is to include restrictive covenants into contracts of employment for certain employees, meaning that if they leave your organisation, for a fixed time period, they would have restrictions imposed on taking staff or clients with them or seeking to benefit from confidential information gleaned during their employment.
While this is perfectly understandable, restrictive covenants must be drafted in a specific way to ensure they are enforceable (should the time ever come) and lawful.
Restrictive covenants may not be included in all of your employment contracts, however, they may be included in those of senior staff members, who are privy to greater levels of access and information than junior individuals, and also may be more in a position to pose a risk to your commercial interests immediately after departing your organisation. Indeed, by placing restrictive covenants into the employment contracts of junior staff, these may not be enforceable.
What restrictions can be imposed on employees?
You may consider implementing restrictive covenants to prevent specific employees from undertaking any of the following actions if they leave your business:
- Soliciting customers (existing and potential)
- Soliciting employees
- Dealing with customers (even if the customer approaches the former employee)
- Competing by using confidential information
But any restrictions must be reasonable; hence the drafting process needs to be undertaken with great care as the Courts would likely interpret overly restrictive or vague covenants as immediately invalid.
Are restrictive covenants always enforceable in Ireland?
As with as many aspects of law, the enforceability of restrictive covenants will be determined on a case by case basis. If the Court is asked to rule on a legal matter in relation to restrictive covenants, they will consider three key questions:
- Has the intended restriction been clearly defined? i.e. does the contract make it clear which specific trade or profession this relates to?
- Has a reasonable geographic limit or product scope been included?
- Is the timeframe for when the restriction will cease to apply as short a feasibly possible?
Lavelle Partners can help you to draft restrictive covenants which have the optimal chance of being upheld by the Courts. And if you are facing a challenge regarding the enforceability of existing restrictive covenants, we have the experience and in-depth knowledge of employment law to provide the best chance of ensuring your commercial interests are met.
How can Lavelle Partners assist with restrictive covenants?
- Our team of employment law Solicitors, headed by Senior Partner, Marc Fitzgibbon, has been assisting employers for over 30 years in relation to restrictive covenants, and as a result, has developed a strong and enviable reputation nationally for achieving excellence in this area of law.
- Marc is a former member of the Law Society of Ireland’s Employment & Equality Law Committee and European Employment Lawyers Association.
- We understand the need to ensure restrictive covenant matters are handled in full accordance with employment legislation and best practice, thereby protecting your business or organisation from the threat of a claim or reputational damage.
- Our Solicitors will work alongside your in-house or external HR team, ensuring that your restrictive covenant matter is handled efficiently and with the minimum of demands on your resources.
- You can be assured your restrictive covenant matter will be handled with the utmost professionalism and confidentiality.
Our partnership with Talbot Pierce
Lavelle Partners work with Talbot Pierce to provide a seamless service in respect of Human Resource Management. Talbot Pierce are a team of specialist HR professionals who work with us on a range of matters including advice on and delivery of conflict/dispute resolution solutions, best-practice HR strategies, policies and procedures.
For further information on employment contract restrictive covenants in Ireland, please contact Lavelle Partners in confidence on (01) 644 5800*.
*Please note that fees apply to all consultations and advice cannot be given free of charge.