Restrictive covenant enforcement letter template3 minute read
Our Restrictive Covenant Enforcement Letter Template safeguards against violations, protecting business interests and maintaining contractual agreements.
If it is alleged that a former employee has breached a restrictive covenant, send this model letter to request them to provide written agremeent that they will cease.
What is a Restrictive covenant enforcement letter?
A restrictive covenant is a contractual agreement between an employer and an employee that restricts the employee's ability to compete with the employer or solicit the employer's clients or employees after leaving the company.
If a Company suspects that a former employee is acting in breach of those restrictive covenants, then the next step is for the Company to send a letter to remind them of their ongoing obligations. If the letter does not have the desired effect it may be necessary to take legal action.
What are the best practice implementation milestones / timescales?
|Timing (Days from allegation)
|Review Employment Contracts: Review employment contracts to identify relevant restrictive covenants.
|HR / Legal Team
|Gather Evidence: Collect evidence of the former employee's potential breach of restrictive covenants.
|HR / Management Team
|Legal Consultation: Seek legal advice to ensure that the potential breach is enforceable and justified.
|HR / Legal Team
|Prepare Enforcement Letter: Create a comprehensive Restrictive Covenant Enforcement Letter, stating the alleged breach, requested actions, and potential consequences.
|HR / Legal Team
|Issue the Enforcement Letter: After finalising the letter and obtaining approval, issue the Restrictive Covenant Enforcement Letter to the employee, officially notifying them of the potential breach and the company's intent to enforce the restrictive covenants.
|HR / Management Team
|Day 7 (Or as deemed appropriate
What legal and best practice aspects should employers be aware of?
To enforce a restrictive covenant, the employer must typically demonstrate that the covenant is reasonable in scope and duration, and is necessary to protect legitimate business interests such as confidential information, trade secrets, or customer relationships.
In general, to enforce a restrictive covenant, the employer must demonstrate that the covenant is reasonable in light of the employee's job duties and the legitimate business interests at stake, and that the employer has taken reasonable steps to protect those interests.
- Employment Rights Act 1996: Provides provisions for protecting confidential information, trade secrets, and intellectual property through restrictive covenants.
Equality Act 2010: Ensures that any restrictive covenants are not discriminatory and do not disproportionately impact protected groups.
Data Protection Act 2018: Ensures that any employee data used in the enforcement process is handled securely and in compliance with data protection regulations.
Common Law: The template should adhere to common law principles of reasonableness, fairness, and protecting legitimate business interests when enforcing restrictive covenants.
Employment Contracts: The letter template should align with the terms of the employment contract and any restrictive covenants mentioned therein.
Restrictive covenant enforcement [Delete this line]
Dear [Recipient first name],
We refer to your employment with our Company which ended on [date].
As you are aware, even though you are no longer employed by the Company, you are still bound by the post-employment obligations and restrictions set out in clauses (number) of your contract of employment, a copy of which is attached for your information.
We now have reason to believe that you are in breach of these post-employment obligations and restrictions, due to your following actions:
- [Specify actions which you believe have led to one or more of the restrictive covenants being breached]
We would advise you that if you are in breach of your restrictive covenants, we can apply to court for an injunction preventing you from breaching them and in this case, if civil proceedings are issued against you, a claim will also be made for our legal and court costs. Additionally, we will seek damages for any losses caused to the Company by your breach of contract, and any breach of confidence or fiduciary duty renders you and/or your new employer liable to account to the Company for all profits that you or your new employer have made due to the breach. Finally, we will seek to recover damages from your new employer for the torts of inducement of breach of contract and interference with our business by unlawful means.
We will, if necessary, take action against both you and your new employer.
Accordingly, within 7 days from the date of this letter, we require a written undertaking from you that you will not breach, or will immediately cease any action which is in breach of, your post-termination obligations and restrictions set out in your contract of employment. If we do not hear from you within 7 days, we will refer this matter to our solicitors and instruct them to take the necessary legal action against you.
We have also sent a copy of this letter to your new employer.
Yours [faithfully | sincerely],
[Sender job title]
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