1. Post-termination restrictive covenants

1. Post-termination restrictive covenants

Post-termination restrictive covenants refer to the provisions in the employment contract that seek to limit the types of activities in which former employees may engage following the end of their employment; for example, disallowing them to work for business competitors or to solicit business from former clients.

These covenants are legally enforceable only if they are considered reasonable in the eyes of the law. They will be considered reasonable if the employer has a legitimate business interest to protect (such as trade secrets and confidential information, as opposed to information obtainable from online search) and they restrict an employee no more than reasonably necessary to protect such legitimate business interest. In case of dispute, the court will look at the length of the restriction, the type of the trade, the job nature and experience of the employee and other relevant factors. For example, the court will unlikely allow a restrictive covenant where the length is too long (to affect the livelihood of the employee seriously), the trade has a low entry barrier (for example, a restaurant instead of a company in the innovation and technology field) and the employee is relatively junior (for example, an office assistant as opposed to a senior manager). This is a highly specialised field of the employment law. Before an employment contract is drafted, legal advice should be sought.

Garden leave

An employment contract may contain a provision that an employee leaving a job may be instructed to stay away from work during the notice period while still getting full wage. This is known as “garden leave”. During this period, the employee is not allowed to contact the employer’s clients or suppliers and is not permitted to work for another employer and is still subject to all the other obligations under the contract. The contractual provision may take many forms, but normally it allows the employer to give work to the employee from time to time or not to give any work. This type of contractual provision seeks to minimize the risk of the leaving employees enticing away the clients of the business or even other colleagues.