Non-compete clauses are difficult to enforce in a digital age

The Government is preparing to review the case for and against non-compete clauses in staff contracts. Coodes’ Employment Team considers whether the onus should be on businesses themselves.

“Non-complete clauses, sometimes called restrictive covenants, are commonly used in contracts to prevent employees from setting up, or working as, a competitor after they leave a firm. The Government has launched a review of this practice, with business secretary Sajid Javid saying he wants to “break down any barriers that are curbing innovation and entrepreneurship.” Businesses and employees are being encouraged to put forward their views.

“The fact is that restrictive covenants are becoming increasingly difficult to enforce in a digital age. There have always been challenges with proving an employee has taken contacts or data when they leave a job, but the prevalence of digital information is making this almost impossible. While previously an employee would need to photocopy papers to take data with them, most staff members can now access contact details and other information online from wherever they are. And social networking sites like LinkedIn make it more and more difficult to differentiate between personal and professional data and contacts. I have previously commented on the complex question of who owns data held on LinkedIn.

“While it will be interesting to see the outcome of the Government review, I think the onus should be on businesses to work out how they can deal with sensitive data at a practical level. Employers should be thinking about how they protect their business against competitors, which may involve reviewing IT practices and carefully managing client relationships when staff leave. Given the fast-changing digital world we inhabit, this needs to be an ongoing focus for employers.”

For more information or advice, please contact the Employment team on 0800 328 3282 or info@coodes.co.uk. Alternatively, you can use the contact form.