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Restrictive Covenants in Hong Kong

1. Definition of Restrictive Covenants

A restraint clause in a contract of employment is enforceable only if it protects an employer interest considered protectable by law. As a general rule, such a proprietary interest normally refers to trade secrets or customer connections but not mere competition. Terms which expressly restrain employees or former employees from enticing, soliciting or employing employees of an employer will be enforced so long as the courts are satisfied that such employees might have access to such secrets or customer connections.

As a matter of public policy, the courts have been mindful that the law not be used to stifle bona fide competition or to prevent the employee from using his own skills and knowledge.

2. Enforcement of Restrictive Covenants

Enforcement of Restrictive Covenants is available to the employer through civil proceedings for damages and/or injunctive relief. In the case of a restraint on an employee where the employer’s action to enforce the restraint is unlikely to be heard quickly, the employer may attempt to seek an interim order of injunction.

3. Use and Limitations of Garden Leave

An employment contract may contain a garden leave clause, namely a term permitting the employer to require the employee to not work or enter employers premises during the notice period. Under Common Law, in the absence of an express garden leave provision in the original employment contract, an employer may not be permitted to place an employee on garden leave where the employee’s skills require frequent exercise for their enhancement and preservation.

For more information, please contact L&E Global.
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