News: Contract Law
Business contract law: 7 times more confidentiality cases in 2008
26 January 2009
The increasing number of former employees establishing rival firms has highlighted the need for business contract law training.
Reynolds Porter Chamberlain (RPC) advises companies to include both confidentiality clauses and post-termination restrictions in their employment contracts to prevent this behaviour.
The law firm reports the number of claims reaching the chancery division of the high court was seven times higher last year than in 2006.
Cath Thorpe, a partner at the company, says more employees are using confidential information obtained during their work at one company while employed at the next.
She states: "Other employees are setting up their own businesses using confidential information in order to compete head to head with their former employer."
Among the advice RPC offers is the inclusion of garden leave clauses in companies' terms and conditions.
If this is not part of the contract, preventing a staff member from working during their notice period "may release them from any post-termination restrictions".
Rachel Dineley, a partner at legal company Beachcroft, recently told Personnel Today that companies must handle pay cuts carefully, as these can also breach employees' contracts if mismanaged.