How to protect your business when an Employee leaves

Video Transcription

Mini Setty: The best way for a company to protect its business from employees who leave the business is by having robust restrictive covenants.

Restrictive covenants are there to only protect legitimate interests. And often where an employee leaves the organization, it leaves a hole in the ability of the company to service its customers and clients and they need a period of time in which to ensure that new relationships can be formed and solidified. And to do that, if you have robust restrictive covenants, then you can protect your business from your ex-employee poaching your customers and clients for a period of time and then thereafter, it's fair game.

But what we find is a lot of companies fall down on not having robust enough restrictive covenants from the outset of the relationship or alternatively, when the employee goes through the organization and gets promoted that they haven't kept up-to-date with the restrictive covenants. And then finally when the employee leaves and they want to take other employees with them or customers with them, the question we're asked is, "How can I stop them?" And, you know, our hands are tied in terms of how we can protect the business. But if you do ensure that when you are changing contracts or there are promotions and you're looking at that aspect of contracts, then you're always keeping the restrictions relevant and only so wide so as to be enforceable.