One of the big questions at present is the impact that post-termination restrictions in employment contracts are having on "innovation and growth". The Business Secretary has announced plans to look into the use of such clauses and whether they work as a barrier to innovation and entrepreneurship, including by preventing employees from leaving employment to start up their own business.
A call for evidence is to be launched asking for views on the use and impact of these restrictions. Do they hinder start-ups from hiring the best talent? Do they deter employees from leaving to set up on their own?
Part of the government's "Innovation Plan", its pledge to make Britain the best place to start a business, the launch of a consultation also puts the nature and effectiveness of these restrictions under the spotlight. They can be difficult and costly to enforce, with some employers only using them as a deterrent.
If using them, employers need to ensure that they are carefully drafted, tailored to the individual employee and their role and go no further than is reasonably necessary to protect their legitimate business interest.
The courts will consider the interests of the business, the former employee and the greater public when deciding whether or not to enforce a non-competition clause. They are unlikely to enforce a non-competition clause if it is inappropriate for the former employee’s role, if it is too long, or if its restrictions are unclear.