IT’S a scary thought for any business owner but each employee represents a potential threat to the smooth running of the firm — if and when they leave the business.

It’s one of the most common issues we have to deal with. Many employers believe that there is some form of automatic protection whereby their legitimate business interests are automatically protected. That’s simply not the case.

Far too often we come across situations where the correct post-termination restrictions have not been put in place when a contract has been provided to an employee.

And these days the courts are taking a much narrower view in connection with the protecting of legitimate trade interests.

In the past, post-termination restrictions would frequently prevent any departing employees from working for competitors for a stated period and often for a specified area.

It is always important however that the wording of any restrictions of this nature do not go any further than is necessary to protect those trade interests and must also be very clear and no wider than necessary to provide reasonable protection.

A prime example relates to the recent case of Tillman v Egon Zehnder Limited. There was a restrictive covenant preventing an ex-employee from being “concerned or interested in” a competitor for six months after termination.

Having considered the full clause, the Court of Appeal interpreted the phrase “concerned or interested in” as being too wide to be enforceable.

This would even prevent a person from holding shares in a company. What is interesting however was that the clause was set aside in its entirety meaning that the employee was free to work with whoever she wished, without the effect of post-termination restrictions.

This matter is now being considered by the Supreme Court. Regardless of the final outcome, it’s a very clear indication employers must review existing clauses of this nature to ensure they are not drafted too widely. Being blunt, what was acceptable historically may no longer be regarded as appropriate.

Protecting your business is always extremely important. The drafting or defeating of post-termination restrictions is a subject which occurs on a weekly basis.