Restrictions and other express terms during employment
Restrictions and other express terms during employment

The following Employment guidance note provides comprehensive and up to date legal information covering:

  • Restrictions and other express terms during employment
  • Restrictions on other business activities
  • Preparing for competitive activity
  • Disclosure of confidential information during employment
  • Duty to act in the best interests of the employer
  • Disclosure obligations
  • Return of company property
  • Enforceability

An employee will be under certain implied duties during employment. These will vary depending on the seniority of the employee and whether he is subject to a duty of fidelity or a more onerous fiduciary duty (see Practice Note: The duty of fidelity and fiduciary duties).

However, the uncertain scope of these implied duties means that sophisticated employers are increasingly including in their contractual documentation express terms which restrict an employee’s activities during employment and strengthen the employer’s position where the employee may wish to compete during employment or may be subject to aggressive approaches from competing employers.

Typical examples of the express terms that an employer may wish to include in the contract of employment are discussed below.

Restrictions on other business activities

This type of provision restrains the employee from undertaking any business activities other than those of the employer during employment, whether within or outside working hours.

Consideration should be given to whether any ban on spare time business activity should be total or partial:

  1. a total ban seeks to prevent any business activity—this would be more appropriate for a senior, full-time employee

  2. a partial ban seeks to prevent only certain types of business activity, typically those that are seen as competing with the employer's business

Such restraints are usually tempered by an exception which allows investment up to a limited