Ex-Staff and Non-Compete Clauses

Ex-Staff and Non-Compete Clauses

We receive a large number of calls from members who have an issue with an ex-member of staff who has taken client details from the salon before leaving. If this has happened to you, what can you do about it and how can you protect yourself from this happening in the future?

Do they have a non-compete clause?

If you’ve had a member of staff leave for whatever reason, and you then find out they have stolen your client details, it can be a really stressful time. Unfortunately, this is very common in our industry and no clever IT system or record system will be totally watertight.

If this has happened to you the first thing to look at is whether the employee had a non-compete clause in place. If they did it is well worth writing to them to remind them of the terms of that clause and that you require them to cease contacting your clients and destroy the data. However it is almost impossible to guarantee that they do this. If you do have a non-compete clause you do have the option of involving lawyers and the courts, however these agreements are notoriously difficult to enforce. A Judge typically requires the employer to show a legitimate business interest to protect in entering the clause in to a contract (over and above the fact that the competitor will simply increase competition). In order for the covenants to be upheld and enforceable they have to be reasonable in scope (e.g. distance from your salon) and duration (anything over 12 months would not normally be acceptable).

Once you have contacted the ex-employee we recommend focussing on your business and providing reminders to the ex-employee’s clients why you are still the best place to look after them. It’s worth remembering never to talk down the ex-employee, as until recently they worked for you and you trusted your clients to them.

No non-compete clause

If the ex-member of staff didn’t have a non-compete clause then you are very limited in what steps you can take to protect your business. It is however generally understood that the client details are the property of the salon for which they worked, so it may be worth writing to the ex-employee to remind them of that.

Self-employed

If the leaver was self-employed (i.e. they rented space from you) then they own their client details, so unfortunately they are not yours to save. This is one of the disadvantages of the rent a chair / rent a space model.

Non-Compete Clause

An example of a non-compete clause is below. It is often advisable to seek professional legal advice when completing contracts of employment and non-compete clauses, as this may increase your chance of them being legally binding.

Example Non-Compete Clause

The Employee hereby agrees not to:

1)    Directly or indirectly compete with the business of the Company and its associated companies during the period of employment and for a period of insert duration (eg 1 year / 6 months) following termination of employment and notwithstanding the cause or reason for termination.

and

2)    For a period of insert duration following termination of employment; directly or indirectly, whether on his/her own behalf or in conjunction with any person, company, business entity or other organisation whatsoever, solicit, assist in soliciting, accept, or facilitate the acceptance of, or deal with, in competition with the Company, the custom or business of any Customer or Prospective Customer with whom he/she has had substantial personal contact or dealings on behalf of the Company during the period of employment.

This non-compete agreement shall extend only for a radius of  distance (e.g. 3 miles, 10 miles) from the present location of the Company. The term "not compete" as used herein shall mean that the Employee shall not own, manage, operate, consult or be employed in a business substantially similar to, or competitive with, the present business of the Company or such other business activity in which the Company may substantially engage during the term of employment.

If you require any further information on this topic please do contact us on 023 92 295 000 (UK), 1890 946 661 (Ireland), 277 61439 (Malta)