Other useful terms to include in an Employment Contract
6 years ago
Depending on the seniority of the employee or the nature of the work, an employer may want to consider including the following clauses in an employment contract: –
- Confidentiality/non-disclosure – to bind the employee to keep matters pertaining to the organization confidential. This includes confidentiality as to the dealings, research findings, products/services, projections, plans/strategies, practices, pricing, accounts, finances, trading, know-how, trade secrets and customer information.
- Non-compete – to prohibit an employee from directly or indirectly engaging in or being employed by a competing business both during and after employment.
- Non-solicitation – to prohibit an employee from soliciting/poaching employees or clients during and after employment.
NB: 2 and 3 fall in the category of clauses known as “restrictive covenants” whose enforcement is governed by the Contracts in Restraint of Trade Act (Chapter 24, Laws of Kenya). According to the Act, such clauses are only enforceable if they are reasonable.
The High Court has power to declare a restrictive covenant void if the court is satisfied that, having regard to the nature of the profession, trade, business or occupation concerned, and the period of time and the area within which it is expressed to apply, and to all the circumstances of the case, the clause is not reasonable. The idea is not to so tie the hands of an employee as to prevent him from earning a living. For example, for non-compete, a prohibition of six months is likely to be accepted as reasonable especially if the employee is being paid during that time.
- LG Electronics Africa Logistics FZE v Charles Kimari eKLR – file:///C:/Users/user/Downloads/Civil_Suit_346_of_2012.pdf
- Bridge International Academies Limited v Robert Kimani Kiarie  eKLR – file:///C:/Users/user/Downloads/Civil_Case_56_of_2014.pdf
- Intellectual property – to provide for protection and ownership of the company’s intellectual property – those existing as at the date of employment and those that shall subsequently be created by employees of the company.
- Conflict of interest – to compel an employee to disclose any known conflict of interest e.g. interests in companies doing business with the employer, interests in competing businesses, family or romantic relationships with fellow employees etc.
- Additional employment – to prohibit an employee from taking up additional employment outside the Company or to prohibit an employee from working for a competitor.
- Work permits – to provide for a pro-rated refund of the amount spent by the employer in processing a work permit, should the employment terminate prior to expiry of the permit.
- Press statements – to prohibit an employee from making press statements on behalf of the company.
- Dispute resolution – to provide for the preferred mode of dispute resolution. For those holding very senior positions, an employer may prefer arbitration to court proceedings due to the private nature of arbitration.
- Choice of law – for expatriates or those working for multi-nationals, such a clause determines the law that governs the employment. The Kenya Labour Laws will still apply to the extent that the person is working in Kenya and therefore the employer must comply with our Laws.
- Transfer to other entities – permits the employer to move the employee to other affiliate companies and organizations.
- Transfer to other countries – permits the employer to move the employee to other work locations.
- Training bond – to bind the employee to work for the employer for a certain period after conclusion of a training sponsored by the employer and to provide for a pro-rated refund of the amount spent by the employer for the training, should the employment terminate prior to expiry of the stipulated period.
It’s important to indicate those clauses that are intended to remain in force even after termination of the employment, for example, the duty of confidentiality and the restrictive covenants. In the event of default, the employer has the right to obtain injunctive orders as well as damages against the employee.
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