Definition and Types of Restrictive Covenants
The Working Environment Act differs between three different types of restrictive covenants, each enforceable under the law:
- Non-compete clauses;
- Non-solicitation of customers;
- Non-solicitation of employees.
Enforcement of Restrictive Covenants—process and remedies
The employer has the right to invoke enforcement of the restrictive covenants to safeguard the employer’s particular need for protection. For example, if a non-compete clause is invoked, the employer shall pay the employee compensation equivalent to 100 per cent of the employee’s salary up to eight times the National Insurance basic amount, and thereafter a minimum of 70 per cent of the employee’s salary in excess of eight times the National Insurance basic amount. The compensation shall be calculated on the basis of salary earned during the twelve months immediately prior to the date of notice or summary dismissal. The compensation may be limited to twelve times the National Insurance basic amount.
Use and Limitations of Garden Leave
Garden leave describes the practice whereby an employee leaving a job is instructed to stay away from work during the notice period. If an employee has resigned, or otherwise had their employment terminated, a period of at least one month’s notice shall be applicable to either party, unless otherwise agreed to in writing, or laid down in a collective pay agreement. This means that the employee has a right to remain in his position during the notice period. Note that the notice period is calculated from the 1st in the upcoming month after the date of the termination. An exception from this rule applies if the employment relationship is terminated when the employee is on a probationary period. If so, the notice period may only be 14 days, counting from the day of the termination. The employer and the employee may agree to disregard the period of notice.
More challenging, are cases where the employer unilaterally wishes to deprive the employee of his right to work during this period. If the right to remain in the position is to be limited by the use of Garden Leave, the employer has to have “particularly weighty reasons”, which depends on an overall evaluation of the interests of the parties; of particular importance is whether the employee’s right to remain in the position may result in considerable damage. The employee is nonetheless entitled to the same pay and contractual benefits during the Garden Leave. The employer cannot legally predetermine the use of Garden Leave. The use of Garden Leave has to be determined in connection with the situation at the time of the termination of the employment.