But leaving employment to set up in competition with your current employment brings with it a minefield of legal and contractual issues. Get it wrong, and you risk court action, and serious damage to your fledgling business before it has even got off the ground.

So what should founders be aware of when planning their next move? Here are some key do’s and don’ts.

Don’t take confidential information with you

It may feel harmless to email yourself a client list or even screenshot a client list before you leave, but this information belongs to your employer. Even if you built the list or already knew the contacts, anything created in the course of your employment is your employer’s property. Equally, confidential information about a product belongs to your employer even if you played an integral part to its development.

If you’re found to have taken confidential information from your employer, the consequences can be severe. Courts can stop you from using it, force you to delete databases, and even prevent you from contacting the clients whose details you stole for a period of time to “level the playing field.” In short, it’s just not worth the risk. Building your own client base from scratch using sources such as company websites may take a few hours but it could save you from legal action. I always advise clients in this situation to keep records of how you built your list. That way, if challenged, you can prove you’ve acted properly.

Don’t discuss your plans with colleagues

You may be planning to launch the rival business with another colleague or bring them in later but while you’re still employed, you must not encourage colleagues to join you in a new competing venture. This would be viewed as a breach of contract even if it isn’t expressly permitted in your employment contract.

Even seemingly casual conversations can come back to haunt you if they end up disclosed in litigation. Phone records, WhatsApp messages, and emails are all disclosable in court proceedings. Even deleted messages can cause problems. For example, if you are seen to have sent a colleague an unusual number of messages, particularly out of working hours, this could be a red flag. If you do want to set up with a co-founder, make sure they’re outside your current employer’s business. If not, wait until both of you have moved on.

Don’t approach clients before you’ve left

While you’re free to make plans in the background, actively competing with your employer before your resignation date is a breach of contract. This means no pitching, no marketing, and no hinting to clients that you’ll be “in touch soon.”

Do take preparatory steps

You can set up the foundations of your new business while you’re still employed, provided it doesn’t cross into competition. For example, you could register your company, set up a website (without launching it), and arrange finance and investment.

Do take time to understand your restrictive covenants

Most employment contracts in the tech sector contain restrictive covenants. These are clauses designed to limit what you can do after you leave, usually for a set period (e.g., three to six months). They may include:

• Non-compete clauses: restricting you from setting up or joining a competitor
• Non-solicitation clauses: preventing you from approaching former clients
• Non-dealing clauses: stopping you from working with those clients even if they approach you
• Non-poaching clauses: preventing you from recruiting former colleagues

Not all restrictive covenants are enforceable. To stand up in court, they must be reasonable in scope, time, and geography, and they must protect a legitimate business interest. Never assume that they can be ignored. Breaching them could trigger legal action at the very moment you want to be focusing on your new business. Also bear in mind that even if something isn’t restricted in your employment contract, there is an implied level of trust/duty to your current employer.

Do weigh up risk against reward

Sometimes, particularly in fast-moving industries like tech, it may feel impossible to stick to every contractual term. The key is to understand where the risks lie and to minimise them. Often, the safest and least stressful path is to comply with your restrictions, even if it means delaying your launch. If you cannot see a way to avoid breaking a restrictive covenant or implied contractual term, seek professional advice as soon as possible. Remember that the last thing any startup needs is an expensive legal battle before it has even got going and with the right advice, you may be able to negotiate or come to an agreement with your employer.

Conclusion

Launching your own tech venture will be hugely exciting but make sure you take time to consider all the steps you need to take and avoid shortcuts that could lead to sleepless nights and legal disputes.