Q. I have been dismissed by my former employer and have made a claim for unfair dismissal in the employment tribunal. However, I think I am stopped from obtaining new employment in the industry that I worked in because of restrictive covenants in my contract of employment. Do these covenants still have effect if I’ve been unfairly dismissed, as I’m claiming?
Restrictive covenants are contractually-binding promises not to do something. In an employment context they’re often known as “post-termination restrictive covenants” – as the name suggests they attempt to bind an employee not to do particular things after that employee leaves their employment. Generally, post-termination restrictive covenants attempt to bind the employee in some or all of the following ways: not to compete with their employer; not to solicit former clients and/or employees; not to misuse confidential information; and/or not to deal with former clients (among other things).
The effect of the restrictive covenants in your contract of employment will depend upon what those restrictive covenants actually are. If there is a non-compete covenant in your contract then this will generally stop you from competing in a particular manner with your employer for a particular time and in a particular geographical area after your employment ends. This can be, as you can imagine, quite restrictive and may stop you from obtaining employment for a period of time after you leave your job.
If you have been unfairly dismissed from your job (but not wrongfully dismissed or in any other way in breach of your actual contract) then the restrictive covenants will still generally take effect – unfair dismissal is a statutory claim and therefore an unfair dismissal will not breach your contract of employment, releasing you from the restrictive covenants. In order to try and argue that the manner of your dismissal has breached your contract of employment (and that you’re therefore not bound by the covenants) you may wish to rely on facts which demonstrate that there has been a breach of your contract – such as a failure to pay you adequate notice pay or a failure to pay you wages that you are owed (such as, for example, commission owed). However, although the benefit of such an argument is that you can potentially obtain release from any restrictive covenants, there is also the burden that such a line of argument can open you up to a counter-claim in the employment tribunal for negligence and/or breach of contract. The benefits of such an argument must therefore be weighed carefully against the potential burdens.
Generally, a “simple” unfair dismissal claim will not allow an employee to argue that they are released from any restrictive covenants in their contract of employment – the employee will instead need to argue that there has been a repudiatory breach of contract by their employer which releases them from the effect of any covenants. However, and as above, this may be a risky argument – it is therefore advisable that an employee obtain suitable legal advice from a specialist if they think that they’re bound by restrictive covenants.