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Contract and Employment law. Restraint of trade clauses Qualifying for employment rights. Reasons – legitimate interests. Trade secrets and confidential information belonging to the employer;

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contract and employment law

Contract and Employment law

Restraint of trade clauses

Qualifying for employment rights

reasons legitimate interests
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
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
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
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
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
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
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
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;