Definition and Types of Restrictive Covenants
Restraints of trade are common clauses found in most senior employee contracts of employment. The following restrictive covenants are recognised and may be enforceable under the law:
- Non-compete clauses;
- Non-solicitation of customers;
- Non-solicitation of employees.
Enforcement of Restrictive Covenants—process and remedies
The courts are willing to enforce appropriate restraint of trade clauses, provided those clauses comply with the common law principles. An injunction provides the primary remedy for seeking to enforce a restraint of trade. An injunction may restrain the employee from certain action, which may include taking up employment with a competitor, using particular information of the employer, from contacting clients of the employer or from performing particular work.
Use and Limitations of Garden Leave
The advantage of garden leave to an employer is that it removes a potentially damaging employee from the workplace but, unlike regular pay in lieu, prevents the employee from immediately going to work for a competitor because the employment contract remains on foot. The ability to put an employee on garden leave will, however, need to be provided in the contract of employment. Notice will be payable (or must be worked out) in all cases unless the employee is guilty of serious or gross misconduct.