Can I prevent an employee from joining one of our competitors?
Within the freight, shipping & logistics sector, there is of course a lot of movement of staff from one company to another. Much of which is just part & parcel of working within this sector. But, how about when one of your employees joins a direct or very close competitor? Is there anything you can do?
Within the freight & shipping sector, post termination obligations or restrictive covenants as they are better known appear in nearly every contract.
However, these are difficult to enforce, unless you can prove these to be reasonable & that they genuinely protect legitimate business interest.
A restrictive covenant should include specific restrictions. These should be tailored to prevent your employee from using company information to support a competitor or even setting up in business themselves in direct competition.
The majority of restrictive covenants will have a time limit and anything longer than 12 months, will certainly be deemed as unreasonable.
So, let’s take a quick look at the different types of restrictive covenants.
Non-competition: This seeks to prevent an ex-employee from setting up a company working in direct competition with you. You would normally need to set a geographical area, i.e. a 20-mile radius, and a time limit, in which 6 months is the most common – enough time to let any relationships that they have with your clients fizzle out.
Non-solicitation: I’ve kind of covered this above, but this is to stop an ex-employee approaching any of your current customers.
Non-poaching: This attempts to stop an ex-employee recruiting former colleagues.
Confidential information: This seeks to prohibit the use of any confidential information acquired by the employee during their employment. For example, freight rates or agreed charges.
It is all about fairness & balance. Employers wish to protect their business interests, and an ex-employee has the right to earn a living.
Gardening leave is always a good idea for senior members of staff or ones that may have close customer relationships or are privy to freight rates etc… This means they are not at work during their notice period and are unable to start employment with a competitor during the gardening leave period. Of course, you would still need to pay them.
It is a tough subject, and certainly not an area I am an expert on. I would strongly suggest that if this is something you are concerned about of would like further advice on, then I’d recommend you contact a solicitor that specialises in employment law.
I hope this blog has been of interest.
If either myself or any of the team can be of any assistance with anything recruitment related within the shipping, freight & logistics sector, please do not hesitate to get in touch.
All the best,
Director / Founder
t: 023 8033 6633 | e: firstname.lastname@example.org