More staff facing legal action threat

Steve Beahan, head of commercial litigation at Irwin Mitchell
Steve Beahan, head of commercial litigation at Irwin Mitchell
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Former employees are facing an increased threat of legal action for breaking their contracts, says Sheffield lawyer Steve Beahan.

Mr Beahan, head of commercial litigation at Irwin Mitchell, says an increasing number of companies are pursuing legal claims against staff who have left, accusing them of breaching restrictive covenants in their contracts.

He believes the latest increase has been triggered by the economic conditions which have tempted senior executives to join competitor firms, whilst also forcing companies to take a more aggressive stance in relation to litigation.

“We’ve seen a lot of these cases over the last few years, but over the last few months we have experienced a noticeable spike in the number of enquiries,” he said.

“The recession followed by a period of generally flat economic growth appears to be the main contributory factor. For example, there have been more senior people moving jobs, usually caused by concern about their current role, or as a result of not having received a pay rise for a number of years.

“Many of these people who move on are put on long periods of garden leave and in some situations given upfront incentives by their new employer before they join, otherwise known as ‘golden hello’ payments.

“The pressure to make a good impression can drive many people to start work earlier than agreed and to contact previous customers and clients ahead of time.”

He says companies are monitoring the activity of former employees far more closely than before and aren’t afraid to take action if their prospects could be compromised by breaches of restrictive covenants.