Restrictive Covenants and Social Media – ‘Protecting your business’

Employers often choose to include restrictions within employment contracts in order to provide protection for their business or customer contacts.  Over many years there have been significant numbers of cases involving restrictive covenants and their enforceability. Restrictive covenants are often complex due to the uncertainty in the law; the uncertainty has grown in recent years due to the growing popularity of social media in the business environment.

In the recent case of East England Schools CIC (trading as 4myschools) v Palmer and another [2013] EWHC 4138 (QB) the High Court ruled that restrictive covenants in an employment contract protected an employer’s legitimate interests and were enforceable, despite the protected information being widely available on social media.

The general rule is that a contractual term that restricts an employee’s activities after termination of their employment has no legal effect (is void) for being in restraint of trade and against public policy, unless the employer can show that:

  • it has a legitimate proprietary interest that it is appropriate to protect; and
  • the protection sought is no more than is reasonable having regard to the interests of the parties and the public interest.

The court in this case held in favour of the employer, finding that the employer did have a legitimate proprietary interest to protect and that the restrictive covenants were reasonable in the circumstances.

This is an important decision for employers who frequently rely on restrictive covenants. Employers will feel protected knowing that there can still be a proprietary interest to protect despite much information being publicly available on social media.

Top Tips for Employers:

  1. Employers should not simply rely on restrictive covenant clauses that were drafted many years ago. These clauses will not have considered the concept of social media; therefore your business will be exposed to the current social media climate.
  2. Employers should be cautious when taking on new employees as they may be taking on someone who is likely to be subject to restrictive covenants from their ex-employer.
  3. Employers should seek to ensure that any restrictions and confidentiality provisions are drafted as tightly as possible, bearing in mind that restrictions which are drafted too wide may be unenforceable.
  4. Employers should also consider confidentiality provisions and ensure they cover ownership of confidential contact information such as that appearing on an employee’s LinkedIn page. In the Hays Specialist Recruitment Holdings Limited v Ions case, it was held that the employee’s contacts on LinkedIn did not lose the requisite quality of confidence by being posted online.

Employers are strongly advised to seek detailed advice on their restrictive covenants and any related policies on social media to achieve the best possible protection of their business and client base. Our Employment Team can advise employers on all employment law issues. The team can work with you to draft new restrictive covenants and social media policies tailored to your business requirements.

Bharti Gorasia (Solicitor)
Corporate and Commercial Team

For further information please contact:

Andrew Firman is a partner who heads the Employment Team and specialises in commercial and employment matters

Bharti Gorasia is a solicitor in the Corporate and Commercial Team specialising in commercial and employment matters