Restrictive covenants after a resignation: a practical sequence
A senior employee resigns to join a competitor. What an employer should do in the first week, in what order, and what not to do.
Imogen Tran
· 5 min read
The resignation letter arrives on a Friday afternoon. The employee is senior, trusted and heading to a competitor. The next seven days will do more to determine the outcome than the following seven months.
Day one: read the paper
Before anyone speaks to the employee again, read the contract. Find the notice period, any garden-leave clause, the confidentiality terms and the restrictive covenants. Note their wording, not what you remember.
Then ask the questions a court will ask. What legitimate interest does each restriction protect: client relationships, confidential information, a stable team? Does it go further than needed in duration, geography or scope?
Days two and three: secure the information
Without accusing anyone, review what the employee can access and ensure that access is appropriate for a person serving notice. Preserve logs and emails in the ordinary course. Do not read private messages or take steps that you would not take for any departing employee.
Day four: decide on the conversation
There are usually three routes. A cooperative route: a meeting that agrees what the employee will and will not do during the notice period. A formal route: a measured letter to the employee and, if appropriate, the new employer, reminding them of the obligations. Or, rarely, an urgent application to a court. Each has costs and risks, and the cooperative route succeeds more often than employers expect.
What not to do
Do not send a threatening letter drafted in anger. Do not contact the new employer’s client list. Do not assume a covenant is enforceable because it is in the contract, or unenforceable because it looks harsh.
For the employee
If you are the one resigning, ask for time before you sign anything and do not take documents with you. A short consultation before you resign is cheaper than a dispute after.
This note is general information for business readers, not legal advice. Rules on restrictive covenants vary considerably by jurisdiction.