It can be in your organisation’s best interests to defend your customer base from former members of staff.
There’s a legal option to protect yourself from this issue. You can get immediate employment law assistance if the matter is urgent.
Or you can read our guide below on how to make sure your industry standing is secure.
What’s an employee non-solicitation agreement?
It’s a type of restrictive covenant that prevents former employees from actively seeking business from your customers.
Sometimes businesses will refer to it as a non-solicit agreement.
You can prevent an individual who has left a role from taking advantage of relationships you have with your clients. It could potentially encourage your clients to take their business elsewhere.
But by making an employee sign a non-solicitation agreement, then this will stop them.
UK employees who do leave roles are then, generally, unable to take advantage of trade connections established by you.
A typical non-solicitation agreement template will outline:
- The employee won’t solicit with any person who was, for a period leading up to the end of their employment.
- A customer or client with which they had direct contact with.
You can present non-solicitation agreement clauses as part of an overall restrictive covenant, which protects the confidential information, trade secrets or customer connections of a business.
The purpose of the agreement
The purpose of a non-compete or non-solicitation agreement isn’t to prevent fair competition. It’s to work against ex-employees obtaining an unfair advantage through exploiting existing client non-solicitation agreement relationships for their own, or another company’s, benefit.
Generally, non-solicitation agreements are for customers who the employee had contact with during a specific period.
However, you can extend this to include all clients the employee was aware of in certain situations.
This includes if the aim of the business is to protect the identity of clients the public doesn’t know.
Important rules to remember
When forming an agreement with an ex-employee, you must be careful to distinguish the company’s customer connections from the personal connections of the employee.
This is especially important in non-solicitation agreements between businesses.
If an employee leaves the company to start their own business, taking clients with them they personally brought in the first place, it may be difficult to enforce the agreement.
There are risks associated with a subcontractor non-solicitation agreement and it’s unlikely that employers will attempt to enforce one.
An independent contractor non-solicitation agreement may suggest a degree of control over the contractor on the part of the business, and point towards an employment relationship it didn’t intend.
Breaking a non-solicitation agreement can enable you to take the individual to court to seek an injunction and, potentially, damages for breach of contract.
However, a true breach can be difficult to prove and will depend upon the wording of the agreement and the specific circumstances of the case.
For example, if an accountant leaves a company and informs clients how they can contact him, this is likely to be a breach of his agreement.
However, if he informs them he’s leaving the company for their information, the court isn’t likely to find issue with it.
What’s important to remember is solicitation requires an invitation to transact business, and intent to do so, whether express or implied.
Need our help?
If you want to maintain your clients, non-solicitation agreements could be for you. We can help you set up this policy: 1890 252 923.
