Can I stop former staff competing with my firm

DW writes: My partner and I set up a business five years ago and have operated with the same staff of four. Three are now leaving to set up their own business and we fear they will poach all our customers. We never bothered with employee contracts. What can we do to stop them setting up in competition?

Answer

You are required by law to give a worker written particulars reflecting the contract of employment with that person. It is always a good idea to issue a written employment contract, particularly when staff have access to confidential information such as customer lists or have detailed knowledge of a process or design. In these circumstances a typical employment contract would include confidentiality clauses and clauses restricting the worker after his or her employment ends. These would typically include some form of anti-competition clause. But your staff do not have written contracts so they cannot be prevented from setting up in competition to you. It is also unlikely that they could be prevented from approaching your customers. To protect your interests, you should seek to reach agreement with outgoing staff that they will not solicit your customers, suppliers or staff, that they will not set up in business within a given geographical area and that they will not compete head-on with your business for a limited period. To persuade the staff to enter into such an agreement, you may need to offer compensation because you cannot compel them. You should take legal advice to ensure any agreement made can be enforced in the courts if its breached.