For any company to thrive on the market, it must be ready to keep its secrets safe. One of the most competitive advantages is to ensure the company goodwill is protected. This is possible if an employer has the right knowledge to navigate employee confidentially agreements to ensure every valuable asset is protected. One way to ensure that an employee doesn’t disclose your business valuable information after leaving the company is to have them sign a separation agreement. Anytime an employee gets to know valuable confidential information about the company they are working for, this is a way that could harm that company if the employee decides to leave or is fired.
However, with a non-compete clause, the employer may be at peace to know that the employee will not compete with the business either when working for a competitor or starting their own business.
Understanding Your Company’s Goodwill
Any company goodwill consists of the business ideas that are hard to quantify. Those ideas should be in such a way that they are difficult or even hard to for any business to duplicate. For instance, you may have a particular reputation or brand, a relation with an employee that may be making you thrive on the market. Therefore, having such information protected ensures that you are assured that your company’s confidential information will be retained even if an employee leaves a company. With exposed goodwill, your business may be prone to:
- Having your best employees poached by your competitors. If this happens, your competitor may lure any poached employee into inciting your customers and offering them payments.
- Solicitation of customers by your competitors rather than using advertisements.
- Have your intellectual property at stake. If you have any intellectual property that is not registered or protected, it could easily be a way for your competitors to gain access to your patents and designs.
Any restraint of trade that is necessary to protect your business goodwill can be enforced in court. Therefore it should be clear and have a legitimate proprietary interest to protect your business.
How Do I Protect My Company’s Goodwill Through A Separation Agreement?
Any company reputation is derived from having a preferable business over other competitors. Having goodwill is critical to making sure any business can woo customers and retain them. Again, it’s of great value when your business is being sold or valued. Therefore, every business should have confidentiality agreements and restrictive covenant drafted toward protecting the business goodwill. With a restraint of trade in Australia, you can protect yourself from having other businesses compete with your own. Having your employee sign, a non-compete clause would help. To protect your goodwill, a reasonable non-compete clause should cover basics such as:
- Prohibition of any activity that may lead your employee to consult with your competitors.
- The agreement should contain the names of the competitors that may pose a threat to your business goodwill.
- Limit any activity deemed to compete with your business. However, you should make it reasonable enough not to limit the employee from working for your competitors. Such could be used against you if the employee files a complaint. Every person has the right to make a living. Therefore, you should ensure that the non-compete agreement is reasonable enough. Meaning it should not be too long or covering unreasonable geographical scope.
Any restricted covenant should give the users valuable information on how the protections are to be applied and what would happen in the event of a breach of such a covenant. Thus, you should word your restraint of trade carefully. In case of any violation, you can be sure to secure reasonable damages for your business. It’s worth noting that the court will only recognize your restraint to trade if deems it reasonable regarding its scope and fairness of the restriction placed upon an employee.
How To Enforce
When employees leave your company or have their employment contract ended, they leave with valuable information. It’s therefore vital to have your goodwill protected by having a non-compete agreement. Having the legal agreement in place protects your company’s information and increases the value for your business. For those who may want to buy your business in the future, they are forced to pay a greater price.
When it comes to drafting the legal agreements, you can choose to work with an experienced business lawyer. Once an employee leaves your company and uses your confidential information. It’s always advisable to act immediately to ensure that you enforce the provision set. For your case to be successful, the court has to determine whether the provisions were reasonable. Working with a lawyer who is conversant with your jurisdiction can help come up with the right amount to recover for your business. Besides, your lawyer can guide you on any laws governing restrictive covenants.