{"id":350,"date":"2016-07-04T08:27:03","date_gmt":"2016-07-04T07:27:03","guid":{"rendered":"https:\/\/newmillennia.creativespark.co.uk\/should-former-employees-be-free-to-compete-with-their-former-employers\/"},"modified":"2023-07-27T16:03:29","modified_gmt":"2023-07-27T15:03:29","slug":"should-former-employees-be-free-to-compete-with-their-former-employers","status":"publish","type":"post","link":"https:\/\/www.newmillennia.co.uk\/blog\/should-former-employees-be-free-to-compete-with-their-former-employers\/","title":{"rendered":"Should former employees be free to compete with their former employers?"},"content":{"rendered":"

 <\/p>\n

It is not uncommon for recruiters to move on to\u00a0set up their own recruitment businesses<\/a>, but they can be prevented from doing so by their employers.<\/p>\n

The Department for Business, Innovation and Skills has launched a call for evidence to gather views on whether new start up businesses are potentially being held back by \u2018non-compete clauses\u2019 in employment contracts.<\/p>\n

The consultation states: \u201cThe Government wants to explore whether non-compete clauses can unfairly hinder workers from moving freely between employers, and from developing innovative ideas, translating those ideas into a start-up, and growing their business.\u201d<\/p>\n

What are non-compete clauses?<\/strong><\/p>\n

There are various provisions implied in a contract of employment which prevent people from engaging in activities that undermine their employer\u2019s business, such as operating or working for a competing business.<\/p>\n

The benefit of these provisions are lost once the employment comes to an end. The only way that an employer can continue to protect its business is by ensuring that there are specific provisions in the employee\u2019s contract which restrict what the (then) former employee will be able to do when they leave the employer. These clauses are generally referred to as restrictive covenants which include the \u2018non-compete\u2019 clauses.<\/p>\n

They can include restrictions such as preventing the former employee from: \u2022 Running or working for a competing business \u2022 Enticing the former employer\u2019s customers \u2022 Enticing the former employer\u2019s staff to come and work with them\/for them.<\/p>\n

The BIS call for evidence will consider:<\/strong><\/p>\n

\u201cwhether non-compete clauses may be hindering those who might be considering setting up, or have set up, an innovative enterprise \u2013 when it is most critical for the entrepreneur to be able to hire suitable staff to help grow the new business.\u201d<\/p>\n

How far should non-compete clauses go?<\/strong><\/p>\n

There are already measures in place which limit the use of non-compete clauses. If an employer wishes to rely on them, courts must consider whether there is a legitimate business interest to protect and whether the clause goes no further than is necessary to protect that interest.<\/p>\n

Recruitment consultants are likely to be amongst the very individuals that Government has in mind when considering how new start-ups may potentially be \u2018hindered\u2019 by the use of non-compete clauses.<\/p>\n

However, non-compete clauses are widely used by recruiters in the contracts of their employees, given the need to guard against that very risk of an individual leaving and seeking to poach clients and candidates. The consequences to a former employer\u2019s business can be catastrophic.<\/p>\n","protected":false},"excerpt":{"rendered":"

  It is not uncommon for recruiters to move on to\u00a0set up their own recruitment businesses, but they can be prevented from doing so by their employers. 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