Restrictive Covenants during the COVID-19 Pandemic

Year Published: 2020

The COVID-19 pandemic has caused an increase in the amount of employees who are working from home.  Whilst working from home has many benefits, it can also give rise to legitimate concerns from businesses regarding the need to protect the interests of their business and its confidential trading information.

Many employers have policies or contractual agreements, which limit their employees’ ability to engage in other forms of employment.  These are called ‘restrictive covenants’.  They are basically clauses which prevent employees from soliciting customers, staff and trade secrets etc., when their employment comes to an end.

Employers may want to consider how and whether those policies / clauses apply to their employees who are on temporary furlough leave, and whether modifications need to be made to ensure their confidential information, business and customers are appropriately protected.

Many employees are accepting temporary work whilst they are on furlough leave – hopefully with their employer’s consent in most cases.  Understandably, employees may be concerned about their future prospects and, sadly, many employees may face redundancy in the future. This can have clear implications in relation to restrictive covenants.

When insecurity is rife and jobs are scarce, there is a greater likelihood that furloughed employees, those who become redundant, and even employees who simply feel more exposed to risk, might take steps to better their predicament at their employer’s expense.

If you would like advice on how to communicate any concerns to a member of staff, or you believe you may need to take action to prevent or remedy a breach of confidential information or customers/staff being solicited from your business, please contact our Dispute Resolution team on 0161 475 7676 or email [email protected].

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