Drafting effective restrictive covenants is difficult to master
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Drafting effective restrictive covenants is difficult to master. Whilst employers want to ensure their businesses are protected from exiting employees, it’s essential these clauses are not over-reaching or too broad to enforce.
Laura Williams is the Founder and Principal at Williams HR Law and speaker at our upcoming e-learning course ‘Restrictive covenants: How to protect your business’.
HRD Canada spoke to her about the biggest mistakes you’re making when you draft and impose your covenants.
“One error that employers seem to consistently make is being overly broad in establishing restrictions,” explained Laura.
“For instance, organizations sometimes go over the top in terms of the duration of the restrictions and/or the geographic scope. Businesses may try to claim that an employee cannot solicit or compete across the country – or the globe, in some cases!”
Laura also mentioned that employers have the propensity to make blunders when it comes to ensuring that the restrictions are reasonable taking into account the interests the organization seeks to protect.
“Often times, one of the key mistakes HR leaders make is to overstretch the limitations by imposing non-competition clauses. Non-compete clauses will not be enforceable when imposing non-solicitation restrictions would be more reasonable in the circumstances.
Essentially, most employers want to restrict and restrain the individual from approaching clients, or unfairly competing with the company by exploiting trade secrets that the employee learned in their former employment . Fundamentally, employers should ensure that the interests they are seeking to protect are legitimate, and that they are not over-stretching or over-restraining the former employee from being able to move on and earn a livelihood.”
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Restrictive covenants need to be seen as reasonable in the eyes of the law – and, remember, ambiguity is not your friend here. As Laura will explain at the upcoming webinar, employers who choose to put these clauses in place need to ensure they’re perfectly clear and not outlandish.
“They should relate directly to the company’s interests – that’s the bottom line,” added Laura.
To hear more on what your restrictive covenants need to include, and how to ensure they’ll stand up in the event they are challenged, don’t miss Laura’s upcoming e-learning course on November 6.