Receiving a letter from your former employer threatening an injunction or an employment injunction application can be alarming. It is often accompanied by allegations that you have breached your employment contract, contacted clients, taken confidential information or joined a competitor in circumstances your employer believes are restricted.
Understanding what an injunction is, why employers seek them and what steps you should take can help you protect your position.
What is an Employment Injunction?
An employment injunction is a court order that either requires an employee to do something or prevents them from taking specific actions, such as contacting clients, using confidential information or working in breach of enforceable contractual restrictions.
Employers commonly seek employment injunctions when they believe a current or former employee is acting in breach of obligations they are owed and in a way that could damage their business. An injunction is designed to stop something happening before the damage is done or to prevent further damage from occurring.
For example, an employer may seek an injunction to prevent a former employee from contacting clients in breach of a non-solicitation clause.
Because injunctions are intended to deal with urgent situations, things can move quickly and sometimes reach court within days.
Why Do Employers Seek Employment Injunctions?
Employers are not entitled to obtain an injunction simply because they are unhappy that an employee has resigned or moved to a competitor.
Instead, they must usually show that they have a legitimate business interest worth protecting and that the employee is acting in breach of an obligation that they owe to their former employer.
Common reasons for employment injunction applications include:
- Allegations that confidential information has been taken or copied;
- Concerns that trade secrets may be shared with a competitor;
- Attempts to contact or move clients to a new employer;
- Attempts to recruit former colleagues;
- Breaches of garden leave provisions; and
- Breaches of restrictive covenants in an employment contract.
In practice, employers often use injunctions where they believe immediate action is needed to prevent damage to customer relationships or the misuse of confidential information.
Types of Employment Injunctions and What They Cover
Prohibitory Injunctions
A prohibitory injunction prevents someone from conducting a specific action. Examples include preventing a former employee from:
- Contacting clients;
- Sharing confidential information;
- Using trade secrets; or
- Recruiting former colleagues.
Mandatory Injunctions
A court could order a former employee to:
- Return confidential documents;
- Hand back company property;
- Delete employer information from personal devices; or
- Provide access to information that should be returned to the employer.
Interim Injunctions
An interim injunction is a temporary order granted before a court hearing has taken place. For example, an employee may be temporarily prevented from dealing with former clients until the court has determined whether a restrictive covenant is enforceable.
Restrictive Covenants
Many employment-related injunctions arise from allegations that an employee or former employee has breached restrictive covenants or post-termination restriction contained in employment contracts.
These commonly include:
- Non-Compete Clauses, these seek to prevent a former employee from working for a competitor or setting up a competing business;
- Non-Solicitation & Non-Dealing of Customers/Clients Clauses, these prevent former employees from soliciting and/or dealing with former clients, customers, or suppliers;
- Non-Solicitation & Non-Dealing of Employees Clauses;
- These prevent former employees from soliciting or employing their former colleagues.
Employers will often seek injunctions where they believe confidential information, pricing data, client lists, or trade secrets are at risk of being disclosed or misused.
What Should You Do if Your Former Employer Threatens an Injunction?
If you receive a solicitor’s letter threatening legal action, consider taking the following steps.
- Seek Legal Advice Early
Obtaining advice at an early stage can help you understand your position and how best to respond. Failing to respond or take the appropriate action could result in your former employer commencing proceedings for an injunction without providing further notice.
Injunctive relief proceedings take place in the High Court and, due to their urgent nature, will often incur significant time and costs in a short period of time. Further, the unsuccessful party will be also liable for the costs incurred by the other party, reflecting the need to ensure they are taken seriously and managed correctly.
- Review Your Contracts
- Your employment contract;
- Any service agreement;
- Shareholder agreements; and
- Any settlement agreement entered when you left employment.
Particular attention should be paid to restrictive covenants, non-compete clauses, post-termination restrictions and confidentiality obligations.
- Gather and Preserve Documents
Keep copies of relevant correspondence, emails, and documents. Do not delete information, even if you believe it may be unhelpful to your position. Deleting evidence once a dispute has arisen can create additional problems.
- Stop Any Potentially Risky Activity
If allegations relate to client contact or confidential information, think carefully before taking any further action until you have received legal advice. Even if you believe the steps you were taking were not in breach of any obligations you owe, it is best to seek advice on the position first. Continuing with the conduct complained about could strengthen your employer’s case.
- Consider Whether the Matter Can Be Resolved
Many disputes are resolved through negotiations, undertakings or agreed arrangements which avoid the cost and uncertainty of litigation. By obtaining advice on your position, we can assist through advice and involvement in trying to seek a resolution of any potential dispute without the matter escalating to formal proceedings.
Key Takeaways When Facing an Employment Injunction
The most important steps are to remain calm, review your contractual obligations, avoid taking any action that could worsen the situation and seek legal advice as soon as possible.
Early advice can often prevent matters escalating and may help resolve disputes before court proceedings become necessary.
How Our Employment Solicitors Can Help
Our employment team regularly advises employees, senior executives and directors who are facing allegations relating to restrictive covenants, confidential information, and injunction proceedings.
We can assist with:
- Reviewing employment contracts and restrictive covenants;
- Advising on whether restrictive covenants, restraints of trade and non-compete provisions are likely to be enforceable;
- Advising in respect of alleged breaches of obligations owed and threatened litigation;
- Responding to letters from employers and their solicitors;
- Negotiating undertakings and settlement arrangements; and
- Defending injunction applications.
Obtaining advice early can often make a significant difference to both the outcome of a dispute and the costs involved. If you are facing a threatened injunction, contact our Employment team for timely, pragmatic advice on protecting your interests and responding effectively to any legal action.
