Audio Pro

Like other businesses, suppliers, manufacturers and retailers in the professional audio industry strive to attract and retain creative individuals, while maintaining a control over their output in order to establish a profitable enterprise.

This balancing act is the mainstay of the creative industry. However, prospective employees – and the courts – will take a dim view of an employer who seeks to gain more control over its staff than is reasonable, or attempts to unduly restrict an individual’s trade when employment ceases.

Dovetailing the protection of the company’s assets with an employee’s rights is best undertaken through the initial employment contract. Most disputes arise when employment is terminated, but it is by having the correct procedures and agreements in place from the outset that the employer is best positioned for any future legal action.

There are three relevant areas to consider in the employment contract: Intellectual Property protection, confidentiality, and control of the employee when he or she leaves.

Intellectual Property protection
A piece of equipment, like a song or a novel, is a work of intellectual property (IP). The law enables companies to control works created by their employees via IP rights. The default legal position is that the company owns any and all IP created during the course of an employee’s period of employment.

If an individual wants to undertake independent projects that aren’t captured by his or her employment contract, such work needs to be carried on outside of work time, using the employee’s own equipment and be distinct from their output as employees.

Ideally, such individuals should seek the consent of their employer first, so that they can later demonstrate the company’s acknowledgement of the external project being separate from their work duties and did not adversely affect them.

Employee confidentiality
There is an implied duty at common law for employees to treat trade secrets as company property. Sensible companies go further and spell out in detail in employment contracts exactly what information employees should consider confidential, in order to avoid confusion later.
Clearly, confidentiality restrictions must not hinder the day-to-day duties of the employee, such as talking to suppliers or sharing sensitive information to win customers. In practice, it is when an individual uses company information to advantage himself that conflicts arise.

Restrictive practices post-employment
The termination of an individual’s employment is a risky time for employers. Companies may therefore seek protection through non-compete clauses, but for these to be enforceable they must be fair.

An employment contract may restrain the individual from competing or soliciting clients or poaching employees, provided such provisions go no further than is reasonably necessary to protect the company’s legitimate business interests.
The courts will reject as a restraint of the individual’s trade, any restriction that is too lengthy or broad in scope, or that prevents someone from working at all.

A senior executive with unique knowledge and access to a company’s clients could present a serious threat if set up in competition with his or her old employer, for instance. Provided the employee was properly briefed and remunerated during employment, the courts would likely uphold a clause preventing him or her from competing directly with his or her previous employer, until such time as the company could provide continuity for its clients.

Alternatively, a company may make provision for gardening leave. Here the individual is relieved of work duties but retained on the payroll, say for six months. Certain preparatory steps towards a new business are allowed, but the employee must abide by the standard duty of care towards their employer. Once employment ends, they can hit the ground running.

For more information, contact
Tahir Basheer at Sheridans:
+44 (0) 20 7079 0103
tbasheer@sheridans.co.uk
www.sheridans.co.uk