Before resorting to court proceedings, it is common for employers to write and seek undertakings from the former employee.  An undertaking is a legally binding promise to do or not to do something, such as not to work for a competitor, or not to set up a competing business, or agreeing to abide by the restrictive covenants in the contract.  We can assist you with a letter requesting undertakings.

If the employee does not provide the undertakings and cannot otherwise come to an agreement with the employee, the next step may be to issue court proceedings for breach of contract.

There are various remedies that can be sought from the court by the employer:

• Injunctions

An injunction is a court order in which the court orders a party to do or not to do something,  An injunction is discretionary, meaning the court will only usually only grant one where a financial remedy such as damages is not adequate, for example where the individual is using confidential information or poaching employees for their own new business, and the employer needs to put a  stop to that quickly before further damage is done to the business. Where an injunction is needed, typically it is needed urgently, so the former employer would probably seek an interim injunction, to begin with.

An interim injunction is an emergency injunction that an employer can seek from the court at short notice before the matter gets to a full trial.  The employer will have to persuade the court that there is a serious issue and that the individual will do damage to their legitimate business interests if they are not prevented promptly from breaching the covenant(s).  A court will often assess the merits stringently and will require persuasive evidence at the interim stage even though it is not a full trial, because by the time the case reaches trial the restricted time periods may have expired in any event.  An interim injunction might, for instance, order an individual to stop working for a competitor or order them to comply with their restrictive covenants.

Employers should be confident there has been a breach, and that they have evidence of the breach, before going ahead with court proceedings, because they will be required to give a cross-undertaking to the employee upon any interim injunction being granted.  The effect of the cross-undertaking means that if when the trial comes around the court decides that the interim injunction should not have been granted, the employer will be liable to pay damages to the employee for losses suffered as a result of the injunction.

In addition to enforcing post-termination restrictive covenants, injunctions can be used to enforce garden leave clauses and breaches relating to confidential information.  There are also springboard injunctions, which aim to prevent commercial gain as a result of being in possession of the employer’s confidential information.

• Damages

An employer can seek damages, i.e. payment of money, in addition to an injunction if the loss is attributable to the breach of covenant. Alternatively, they might only seek only damages if for example, all the possible damage has already been done/the restricted period has expired and an injunction would be ineffective.

• Account of profits

Sometimes it can be difficult to attribute the loss as a result of the breach of a restrictive covenant.  This alternative remedy is a recovery of the profits the individual or their new competing business may have made as a result of the breach of covenant. It is exercised on the discretion of the court.

• Suing competitors 

As an employer, you can sue your employee’s new employer if the new employer has induced or attempts to induce the employee to breach the covenant. The former employer may prefer to sue the new employer as they will probably have greater resources than the employee.   If you have a prospective new employer, they will probably ask to see a copy of your restrictive covenants for that reason.