The hire who brought their old clients with them, and the letter that followed

The interview went well because the candidate was good, and because they were candid about why we should hire them. They knew our market. They knew the buyers in it by name. They had spent four years selling something adjacent to what we sold, to broadly the people we wanted to sell to.

Nobody in the room asked the obvious question, which is what their existing contract said. We assumed that was their problem. Six weeks later a solicitor's letter arrived, and it was addressed to us.

What we thought the risk was

Like most small employers, I understood restrictive covenants as something that happens to a departing employee. If they had signed a non-solicitation clause and they breached it, their old employer could pursue them. Unpleasant for them, nothing to do with us.

That is half right and the missing half is expensive. Alongside any claim against the employee for breach of contract, a former employer can bring a claim against the new employer for the tort of inducing breach of contract. The elements are straightforward: there is a contract, there is a breach of it, and the third party knowingly and intentionally procured that breach. The new employer is generally the better target, because it has more money and more to lose from an injunction than an individual salesperson does.

There is a second and separate exposure that has nothing to do with covenants at all. If the employee brings confidential information with them — a client list, a pricing schedule, a pipeline report — the misuse of that is actionable in its own right, whether or not any restrictive clause is enforceable. Courts can also grant what is known as a springboard injunction, whose purpose is to remove the unfair head start a business has obtained through misuse of confidential information or breach of contract. It is not compensation. It is the court putting you back where you would have been.

Everyone in a small business knows a covenant can bite the person who signed it. Very few know it can bite the company that hired them, and that is the claim with the bigger cheque attached.

What our hire had actually signed

We found out when the letter arrived, which is the wrong time. Their contract contained a twelve-month non-solicitation clause covering clients they had personally dealt with in the final twelve months of employment, and a six-month non-dealing clause on the same group. No blanket non-compete.

That is a fairly typical and fairly enforceable package. Non-solicitation of clients you personally handled, for a defined and modest period, is the kind of restriction courts are most willing to uphold, because it protects a genuine business interest without stopping someone earning a living. A twelve-month blanket ban on working anywhere in the sector would have been far more vulnerable. We had, without meaning to, hired into the enforceable end of the spectrum.

Worse, we had made it easy to prove. Our new starter had emailed eleven of their former clients in their first fortnight, from our email address, announcing the move and inviting a conversation. Three of those had responded and two had ordered. Every step of it was documented, by us, in our own system.

The bit that decides these cases

The interesting part of the law here is what the new employer knew and intended. A defendant who honestly believes the act they are procuring will not amount to a breach of contract is not liable for the tort, even if that belief turns out to be wrong in law — and it does not matter whether the mistaken belief came from their own ignorance or from incorrect advice from their solicitor. That principle was confirmed by the Court of Appeal in Allen v Dodd & Co Ltd in 2020, where a firm that took early legal advice that the covenants were more probably than not unenforceable, and honestly relied on it, escaped liability.

That decision is often reported as reassuring for employers, and it is — but read the mechanism carefully. The protection came from going to the trouble of obtaining advice and relying on it honestly. What it does not protect is the position we were in: never having asked, never having looked at the contract, and having simply not thought about it. Indifference to an employee's obligations is precisely the state of mind these cases are concerned with. Ignorance was not a defence for us because we had never formed a belief at all.

What it cost

We did not go to court. Almost nobody does, which is the point of the letter.

Our solicitor's advice was that the non-solicitation clause was likely enforceable and that the eleven emails were unhelpful. We gave written undertakings that neither the employee nor the company would approach or deal with the named clients for the remainder of the twelve-month period — nine months, as it stood — and the two orders already placed were unwound.

The costs, illustratively but close to the real thing: about £9,400 in legal fees on our side, plus a contribution to theirs. Two orders reversed, worth around £11,000 of revenue. And the larger, quieter number — the salesperson we had recruited on the strength of their relationships could not use those relationships for nine months of their first year. We were paying a £52,000 salary plus employer's National Insurance and pension for someone doing a materially different and harder job than the one we hired them into. They left after fourteen months, which is entirely understandable.

Set against the £150 or so it would have cost to have their contract reviewed before we made the offer, it remains the worst return on a saved fee I have managed.

What we do now, in order

Ask for the contract before the offer. Every candidate, every role, no exceptions — because making it standard removes any suggestion that you singled someone out. The question is simply whether they are subject to any post-termination restrictions, notice obligations, or confidentiality terms, and if so we would like to see them. A candidate who will not produce it is telling you something.

If there are restrictions, take advice before the offer goes out. This is the step that both prevents the problem and, if it goes wrong anyway, creates the honest belief that the law recognises. A brief written opinion on enforceability costs a few hundred pounds and is worth every penny of it.

Put it in the offer letter. Ours now includes a term that the candidate confirms they are not subject to any restriction that would prevent them performing the role, that they will not bring, store or use any confidential information belonging to a former employer, and that they will not solicit or deal with any client they are restricted from approaching. It sets expectations, and it is evidence.

Say it out loud on day one, and write it down. The new starter is told, in the induction and in writing, that they are not to contact anyone from their previous role until we confirm which names are clear. If names are restricted, we list them.

Never put the wrong instruction in writing. A manager telling a new salesperson by email to get in touch with their old contacts converts an arguable case into an obvious one. Ours did not do that, and we were still in trouble; it would have been considerably worse.

The wider point

The instinct that makes a small employer hire someone with a book of contacts is a good instinct. Relationships are genuinely valuable and there is nothing improper about hiring someone who has them. What is improper — and what is actionable — is helping them use relationships that they have contractually agreed not to use for a defined period.

The gap between those two things is entirely bridgeable, and it costs a contract review and a fortnight of patience. Nine months into the restriction, a good salesperson can approach anyone they like. The restrictions were always going to expire. We just could not wait, and paid roughly £20,000 not to.

What the clauses themselves can and cannot lawfully do is set out in restrictive covenants: can you actually stop an ex-employee poaching your clients?, which is worth reading from both sides — as the employer whose staff might leave, and as the one doing the hiring. If you are building the hiring process from scratch, the structural version of it is in how to run a recruitment process that will not land you at a tribunal, and the paperwork that should follow an offer is covered in do you need a written employment contract for your first hire.

Common questions

Can my business really be sued for hiring someone who has restrictive covenants?

Yes. Alongside a claim against the employee for breach of contract, the former employer can sue the new employer for the tort of inducing breach of contract. It requires a contract, a breach of it, and the new employer knowingly and intentionally procuring that breach. In practice the company is often the preferred target, because it has deeper pockets and an injunction hurts it more. There is a separate route too: if the employee brings confidential information such as a client list or pricing data, misuse of that is actionable regardless of whether any covenant is enforceable, and can support a springboard injunction removing the head start.

What should I ask a candidate about their existing contract?

Ask every candidate, as a standard part of the process, whether they are subject to any post-termination restrictions, garden leave or confidentiality obligations, and ask to see the relevant clauses before you make an offer. Make it routine so nobody is singled out. If restrictions exist, get a short written view on enforceability before the offer goes out. That protects you twice over: it tells you what the person can actually do in their first year, and an honestly held belief based on advice is precisely what defeats a claim for inducing breach, even if the advice later proves wrong.

Are restrictive covenants usually enforceable in the UK?

It depends heavily on scope. A covenant is only enforceable if it goes no further than reasonably necessary to protect a legitimate business interest such as client connections, confidential information or workforce stability. Narrow, well-drafted non-solicitation clauses covering clients the employee personally dealt with in their final months, lasting six to twelve months, are frequently upheld. Broad non-compete clauses barring someone from an entire sector or region for a long period are much more vulnerable, because they stop a person earning a living. Never assume a clause is unenforceable because it looks harsh — that judgement needs a solicitor who has read the actual wording.

What is a springboard injunction?

It is an interim court order designed to neutralise an unfair competitive advantage a business has gained through misuse of confidential information, breach of contract or another wrong. Rather than compensating for past loss, it removes the head start for a period roughly equal to the advantage obtained, typically by restraining the new employer from dealing with specific clients or using specific information. It matters to small employers because it can be granted quickly, before any trial, and because the practical effect is to make a new hire commercially unusable for months. The cost is rarely the damages; it is the lost time and the legal fees.