Contract and Employment law Restraint of trade clauses Qualifying for employment rights

Reasons – legitimate interests Trade secrets and confidential information belonging to the employer; From an ex-employee working for a competitor - to prevent employees from competing unfairly against the employer; Information on existing customers and connections - to prevent clients moving with employees; From an ex-employee enticing away current employees;

Example “After leaving employment with this firm you will not work for a competitor within a ten-mile radius of our office for a period of two years” Against unfair competition; The burden of proof is on the employer to prove that it is reasonable; The burden of proof is on the employee If the employee is arguing that the clause is not in public interest;

Are restraint clauses valid? Reasonableness and in the public interest – the court will consider what the clause is trying to protect in terms of: 1. time – no longer than the life span of the business; 2. type of business covered – stop from working in the same field; 3. area – work in both the UK and on a worldwide basis have been held to be valid 4. public policy – not against good business practice and the principles of fairness;

Severing the clause – the ‘blue-pencil’ test Sadler v Imperial Life assurance of Canada (1988)- the court laid down three conditions: The unenforceable part of the clause can be removed without needing to add or change the remaining part; The remaining terms and conditions copntinue to make sense; The removal of the words does not change the clause set out to do; Case law – Marshal v NM Financial Management Ltd (1997), Derivatives Ltd v Morgan (2005)

What can the employer do if the employee breaches a valid restraint clause? Injunctions – court order which prevents the ex-employee from breaching the clause; Interlocutory injunction – is granted whilst the employer is in the process of taking action against the ex-employee; Final injunction – after the case has been heard in court;

Qualifying for employment rights – continuity of employment To gain some employment protection rights, an employee needs to have been employed for a particular period of time; Effective date of termination (EDT)

Automatic rights on the first day of the employment Sex discrimination; Race discrimination; Disability discrimination; Sexual orientation/religion or belief discrimination; Age discrimination; Discrimination on trade union issues The right to equal pay; The right to 26 weeks’ ordinary maternity leave; The right to an itemised pay statement; The right to make a claim for breach of contract; The right to be paid the national minimum wage;

Rights requiring periods of continuous service One year for unfair dismissal; One year for an unfair reasons for their dismissal; Two years for a claim for a redundancy payment; Six months for unpaid additional maternity leave; One year for parental leave; One month for guarantee pay; One month for written statement of terms and conditions;