Definition and Types of Restrictive Covenants
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
Without including such a specific enforcement clause, the employer can claim only damages, but not compliance with the noncompetition covenant. In practice, the burden of proof for damages requires real factual evidence of damage, which makes it very difficult for an employer to claim damages.
Use and Limitations of Garden Leave
Once notice of termination of employment has been issued, case law permits release from duties (garden leave), subject to the employee’s personal rights. There is much dispute about what duties remain in force during garden leave. However, it is generally accepted that the duty of loyalty continues to apply to an employee on garden leave. If the employer does not state otherwise in the notification of garden leave, the employee is entitled to start a new job (subject to non-competition covenants). During garden leave, employees retain all contractual entitlements to remuneration, including pension entitlements. The only exception to the above rules is a fully discretionary bonus to which there is no entitlement during garden leave. It is very important for the employer to set out the conditions applicable to the garden leave (including salary reduction) when issuing the notification of garden leave. Without the agreement of the employee, it is not possible to make payments subject to compliance with a noncompetition or non-solicitation covenant.