Martin Malone provides a detailed analysis of the key issues to consider when leaving a job.

In the modern world, the employment relationship is no longer for life. Although an employment contract is technically in perpetuity, employees regularly choose to leave to further their careers at another business or start their own company. Increasingly, the sophisticated employer ensures that it is as difficult as possible for valued employees to leave employment to work in competition with them, whether directly or indirectly. There are many legal duties that an employee owes to his employer and in many situations when leaving or contemplating leaving employment, the employee's own interests conflict with those of the employer and, sometimes, the duties owed by an employee under a contract of employment. Breach of these duties by an employee can lead to serious consequences up to and including injunctions and legal action in the High Court. It is vital that an employee contemplating leaving employment takes legal advice as to his duties and liabilities up to the point of resignation and during the period of notice.

At Canter Levin & Berg we advise clients who are leaving employment on a daily basis. We are experts at defining the duties and obligations owed by the employee to the employer and advising on the best course of action for the employee to take in order to achieve the best possible result. We know that an employee leaves employment in order to further their career, either with another business or on their own. We ensure that our client's ambitions can be achieved by navigating the way through the many legal pitfalls, leaving the client free to plan for the future.

The most common areas of advice on leaving employment are:

Confidential Information

Employees are often in possession of information obtained or gleaned during their employment. When leaving employment, the employee must be sure that any information used in the future does not contravene legal obligations owed by the employee to his or her former employer. Employees engaged in technical roles will often be made to sign a contract that includes a specific clause in relation to confidential information. The clause will usually specify the information or trade secrets that the employer wishes to protect. Employees must take legal advice if they are planning on utilising information gleaned which comes into conflict with a contractual clause.

If no specific clause exists, the employee will still be bound by common law restrictions on the use of information if the information falls into categories 2 and 3 of the legal information classification system. The categories are as follows:-

• Class 1 Information - Information that the employer holds that is generally available to all workers and the general public. Such information is not capable of being protected
• Class 2 Information - Information that the employer holds that is not generally available and is important for the running of the business. Such information may include client lists, pricing, sales strategies. Employees must treat information as confidential whilst in employment either because they are expressly told to via a contractual clause or in general. An employee may use this information after employment if it has been honestly acquired through experience and naturally through the performance of his or her role unless it is specifically protected by a restrictive covenant.
• Class 3 Information - Trade secrets that are extremely confidential. Employees must not disclose this information either when in employment or after leaving even if it has become acquired through the performance of the role.

It is common for an employer to seek an injunction against an employee who breaches covenant in respect of class 2 or 3 information or uses trade secrets without their being a contractual restraint in place.

Fiduciary Duties

Senior employees, especially directors, often have fiduciary duties which bind their behaviour whilst in employment. In particular, they must put the businesses interests ahead of their own in their actions. When contemplating leaving employment, an employee's fiduciary duties can often come into conflict with their future ambitions. If you are a fiduciary and leaving employment it is vital that you seek legal advice. Breach of a fiduciary duty is a serious matter and actionable in the High Court by the directors of the company.

Garden Leave

Senior employees often have garden leave (commonly known as "gardening leave") clauses in their contracts. Such clauses allow the employer to restrain the employee's employment during their period of notice whilst continuing to pay contractual entitlements such as wages, bonus and benefits. An employee may be expected to surrender his or her laptop or phone, undertake not to contact clients and remain at home during the period of notice. Such clauses are generally lawful, however, legal advice is needed when the employee intends to compete directly with his or her former employer after the period of notice has expired. Advice is especially needed if the employee intends to set up a company in competition with his or her current employer. In general, employers cannot enforce a period of garden leave without contractual entitlement, however, this varies from case to case. Garden leave is an area that has seen increasing litigation in recent years.

Restrictive Covenants

Many employees will have contractual terms restraining them from competing with their current employer, poaching clients and staff and setting up in competition. Such terms are only enforceable in certain circumstances and many covenants are badly drafted and not worth the paper that they are printed on. Many clauses are void as they restrain an employee's trade absolutely or attempt to protect a business interest that is incapable of being protected. It is essential to take legal advice as to the enforceability and effect of restrictive covenants as a breach of these terms can result in an injunction in the High Court and enormous cost and frustration.

Injunctions

Please see our section on injunctions by clicking here.