restraint/non-compete clause

[labman]

Re: restraint/non-compete clause

after taking legal advice I did take employment with the competitor and my employer did nothing.

As always with these things the devil is in the detail.

The saying 'the devil is in the detail' is always applied to any scenario where, in the unlikely event it is tested in court, each case stands or falls on its own merit as it is being tested under Common Law of Contract. It is a very similar scenario to getting watertight Full and Final settlements.

I totally agree with you Crispy, as long as there are no secrets in the hands of the OP (which she would be obliged to keep confidential for at least a 6 month period anyway), then there should be nothing to worry about.

It makes sense for the employer to use these scare tactics from their point of view to secure their own position in the market place. They cannot simply ban you from working in any similar environment which may be deemed as competition as they are removing your right to earn a living.

[fifi]

Re: restraint/non-compete clause

I have contacted a local employment law firm and spoken to one of their solicitors who unfortunately has basically confirmed that the restraint clause would be likely to be upheld if it came to court. I have read so much now about this and it seems that there is no clear-cut rule for this. My employer thinks they are correct in naming 17 competitors to protect legitimate business interests and I think 17 is too restrictive (bearing in mind when I started 10 years ago there were only 2 on the list and this number has increased progressively each time a new contrat has been issued). The only way to find out who is right would be to chance my arm and hand in my notice only to be taken to court and the court side with my employer as the restraint being 'reasonable'. From what I can gather from other colleagues there are quite a few who would want to leave and have to go to a competitor because they like me wouldn't have much other choice - theoretically I suppose the company could end up with a workforce that are prevented from leaving the company but who would inevitably not be working in the best interest of the company!

[labman]

Re: restraint/non-compete clause

On what grounds did the solicitor you spoke to say they thought it would be likely to be upheld?

At the end of the day you must do what you feel right for you, and obviously if you feel there is a real risk, then the sensible thing is to stay where you are.

[fifi]

Re: restraint/non-compete clause

Oh and apparently if I refuse to sign any new contract I could be summarily dismissed because I have signed previous contracts and the 6 months restraint clause would still apply! How in god's name can this be right? Taking all this into consideration unless I leave anyway and work at something else for 6 months (not really an option) I am literally tied to this company until I retire or they get rid of me (a possibility because there have already been redundancies in the past 6 months and one of the reasons why I want to get out now) The thought of being forced to work for them for another 20+ years is sickening..

[labman]

Re: restraint/non-compete clause

It's hard for you, as, as you correctly say, the only way to test it would mean potentially the sacrificial lamb.

it would all rest on whether a court thought the restriction was reasonable or was too broad.

In Wincanton Ltd v Cranny (2000) the court found in favour of the company and upheld the clause. However, in another recent case (I forget the exact name) the court found a restriction where the employee was not allowed to solicit trade from 'any person, firm or company' who had been a customer within the past year was too broad and they judged in favour of the employee.

It really is very much each case standing or falling on its own merits, and often this boils down to the quality of the representation you have in court.

[Crispybacon]

Re: restraint/non-compete clause

Hi Fifi

Are you able to post up the restrictive covenant (removing any specific identifying detail like the 17 companies)?

Does it look anything like below? (It may even be word for word!)

POST TERMINATION RESTRICTIONS

1.1 For the purposes of this Clause 1 the following words shall have the following meanings:

1.1.1 "Protected Client" means any person, firm, company or other organisation to whom the Company or any Relevant Group Company has, in the [twelve] month period up to and including the Relevant Date, provided Protected Existing Business, and with whom the Employee had material contact or dealings during that period

1.1.2 "Protected Prospective Client" means any person, firm, company or other organisation with whom the Company or any Relevant Group Company, in the [twelve] month period up to and including the Relevant Date, has had serious discussions and/or negotiations with a view to the provision of Protected Existing Business or Protected New Business, and with whom the Employee had material contact or dealings during that period

1.1.3 "Protected Existing Business" means products and/or services provided by the Company or a Relevant Group Company and with which the Employee was directly concerned or connected in the [twelve] month period up to and including the Relevant Date

1.1.4 "Protected New Business" means products and/or services which the Company or a Relevant Group Company plans to provide within [twelve] months following the Relevant Date and with which the Employee was directly concerned or connected in the [twelve] month period up to and including the Relevant Date

1.1.5 "Protected Person" means an employee, director, consultant or contractor of the Company or any Relevant Group Company who worked regularly with the Employee in the [twelve] months prior to the Relevant Date and who

(a) has significant knowledge of, regular contact with, or influence over the clients of; and/or
(b) has detailed knowledge of any Confidential Information including but not limited to or belonging to; and/or
(c) would otherwise be a significant loss to the business of the Company or any Relevant Group Company.

1.1.6 "Relevant Date" means the date on which the Employee starts a period of garden leave in accordance with or the date on which their employment terminates, whichever is the earlier.

1.1.7 "Relevant Group Company" means any company in the Group for whom the Employee has performed services or for which they have had managerial responsibility in accordance with terms of this Agreement

1.1.8 "Restricted Period" means:-
(a) in relation to 1.2.1, [twelve] months from the Relevant Date;
(b) in relation to 1.2.2 and 1.2.3, [twelve] months from the Relevant Date;
c) in relation to 1.2.4 and in 1.2.5, [twelve] months from the Relevant Date;

(d) in relation to 1.2.6, [twelve] months from the Relevant Date

1.1.9 "Restricted Territory" means the UK and any other geographical region for which the Employee has had managerial responsibility for the Company or any Relevant Group Company during the [twelve] month period up to and including the Relevant Date

1.2 The Employee agrees that they will not, during the Restricted Period, whether directly or indirectly and whether on their own behalf or for any other person, firm, company or other organisation, in order to compete or to try to compete with the Protected Existing Business or the Protected New Business:

1.2.1 work anywhere in the Restricted Territory, in any capacity for such person, firm, company or other organisation in the same or any other role which would materially assist such person, firm, company or other organisation to so compete, and in particular will not work for the competitors listed in Schedule [XXX], provided that as at the Relevant Date the relevant competitor is still in competition with the Company or any Relevant Group Company in relation to the Protected Existing Business and/or Protected New Business; or

1.2.2 canvass, solicit or approach or cause to be canvassed, solicited or approached any Clients or Prospective Clients; or

1.2.3 deal or do business with any Clients or Prospective Clients; or

1.2.4 solicit or entice or endeavour to solicit or entice away from the Company or any Relevant Group Company, any Protected Person; or

1.2.5 knowingly employ, or aid or assist in or procure the employment of, a Protected Person by any other person, firm, company or other organisation; or

1.2.6 interfere with or attempt to interfere with the business relations subsisting between the Company or any Relevant Group Company and any person, firm, company or other organisation which is a client, customer, supplier, agent or distributor of or for the Company or any Relevant Group Company.

1.3 The Company and the Employee acknowledge, the Employee having taken legal advice that the duration, extent and application of each of the restrictions contained in each part of sub-clause 1.2 is reasonable, and is no greater than is necessary to protect the goodwill, trade secrets, trade connections and Confidential Information of the Company and any Relevant Group Company for whom the Employee has carried out duties.

1.4 The Employee agrees that they will, upon reasonable notice having been given to them, during the term of this Agreement and for [2] years after the termination of their employment, provide the Company with such reasonable assistance as may be required by the Company in connection with any litigation in which it or any company in the Group is, or may become, a party.


The Company will reimburse the Employee for all reasonable out of pocket expenses incurred by them in providing such information and assistance.

1.5 Each of the covenants and obligations set out in each part of this Clause 1 shall be deemed to be separate and severable and enforceable by the Company accordingly. In the event that any of the restrictions shall be held void, but would be enforceable if part of the wording was deleted, the parties agree that such restriction shall apply with such deletion as may be necessary to make it valid and enforceable.

1.6 The Employee will provide any prospective employer with whom they have discussions during the Restricted Period, with a copy of the restrictions set out in this Clause 1.

1.7 Nothing in this Clause 1 shall prevent the Employee from holding shares or securities in any company that is quoted listed or otherwise dealt in on any recognized investment exchange or securities market

[fifi]

Re: restraint/non-compete clause

Just a follow up to this and thanks for all your comments. I have decided not to test the restraint clause and remain with the company for the time being. However I have explored other job opportunities in a slightly different area and have 4 interviews pending.. the thing is if I manage to secure one of these jobs I can potentially do more damage to my present company than if I'd actually joined one of the named competitors! Will I hesitate? Not on your life...

[labman]

Re: restraint/non-compete clause

Excellent, I'm really pleased things are working out for you. Good luck!

[fifi]

Re: restraint/non-compete clause

Hi - me again with another update and further advice needed please...
As suspected I have now received an updated contract to sign. It has already been signed by the HR director and I am requested to sign my acceptance of it's terms and conditions and return to H.O. asap. Now, I have looked at it closely and also spoken with several of my colleagues who also work on the sales team and who have all received updated contracts to sign. Here's the rub - I think I mentioned before that there were 17 companies on the original restraint list, this has now reduced to 14 (with no new additions) but strangely, as I have just discovered, depending on where me and my colleagues are stationed in the UK, the company with who I wished to take employment is listed on some contracts but not on others. This company trade throughout the UK so why stop some reps working for them but not others? What is to stop the rep in, say, Scotland who does not have this company on his list moving just south of the border, handing in his notice and going to work for this company? Do I sign this contract but stress that I do not agree with all the T&C's, bearing in mind what has already happened to me, and if I don't sign it what then?
As always any advice would be welcome..

[bluebottle]

Re: restraint/non-compete clause

Fifi,

Have you spoken to ACAS about these T & Cs? ACAS have access to government law officers, e.g. H.M. Treasury Solicitor, DPP, Attorney General's Office, Solicitor General's Office.

ACAS's website address is Home - Acas. Give them a bell. Their advice is free and impartial.

[fifi]

Re: restraint/non-compete clause

To be honest I spoke to ACAS when all this first kicked off and they were no use at all - just agreed that the restraint clause would probably stand up in court! Not much faith in them - a lot of fence-sitting methinks and plenty of splinters!

[fifi]

Re: restraint/non-compete clause

Wow this just gets better - I thought I would check with my other sales colleagues who have also received new contracts and out of the 10 of us only 2 of us have this particular company on the restraint list - now can they get away with this because surely the restraint clause should be against the company as a competitor not against individual reps - they are either on the list or they're not!Don't really know where to go from here but am sure I will be pressured to sign soon..

[CleverClogs]

Re: restraint/non-compete clause

Had you considered "signing" it with your backside?

[strangewayofsavin]

Re: restraint/non-compete clause

Pants, pants and more pants, your employer is stating if you leave you cannot use your gained experience in another company in the same sector?
If this was enforceble, a bricky would never be able to lay bricks again in his life/ named period, if it was in the contract.
I suggest you read the Unfair terms of contract regulations, the only way this would stack up is, if your current employer paid for all your training, and then I think you would find a precedence for a maximum period of 24 months.
And going by recent Human rights court cases, even this is questionable.