Validity of non-compete agreement in the UK

[Fuzzyduck]

Good morning,

Some advice on the following would be appreciated.

Situation: I am in a recruitment company in London where I have a 360-role (bring on new clients, and fill roles for those clients). I was approached a few weeks ago by one of those clients to join them in an internal capacity. The interview process has been successful and I received the offer letter/contract through today. I was already aware of a clause in my contract that states the following:

- 17(f) shall not, without the previous consent in writing of the Board and whether on the Employee’s own
account or for any other person, firm, company or organisation, directly or indirectly, work for a client
of the Company or any end user of any Company client.

Question: How enforceable is this clause? And should I pay an employment lawyer to cast an eye over this?

(Additional information: I have a good relationship with my company, with 4 years tenure and will not be taking any of my team or confidential information with me. However, legally speaking I am open to being pursued for costs, etc)

Many thanks in advance,
FD

[Amethyst]

The clause seems quite definitive to me to rule out exactly what you are proposing to do - work for a client of the company.

There is the possibility of approaching the 'Board' for consent in writing. There may be some kind of settlement and confidentiality agreement you can enter in to.

Is the rest of paragraph 17 relevant ? ( anything about time limits as to when this applies - you can't be stopped from working for any of the company's clients for the rest of time for example )

Directly or Indirectly and 'any end use of any company client' might be a little wide ranging too.

I'll tag Ula for you but think you will need to post the full para 17 to get an informed opinion.

[ostell]

I read this as working for clients etc while still employed by the company

[Fuzzyduck]

The clause is definitive, I agree. My question is - how enforceable is it? And what are the likely consequences?

Full text posted below:

17 RESTRAINT ON ACTIVITIES OF EMPLOYEE
17.1 For a period of six months after termination of the Employment for whatever reason (including
breach of contract) the Employee:
(a) shall not without the previous consent in writing of the Board and whether on the Employee’s own
account or for any other person, firm, company or organisation, directly or indirectly entice or
endeavour to entice away from the Company or any Group Company any person who is at the
Termination Date, or who at any time during the period of six months prior to the Termination Date
was employed in any capacity by the Company or any Group Company, and with whom the
Employee had contact in the course of their Employment during such six month period, nor will the
Employee knowingly employ or directly or indirectly aid or assist or procure the Employment by any
other person, firm or company of any such person; or

(b) shall not directly or indirectly approach, solicit, or deal with in competition with the Company or any
Group Company, any person, firm, company or other organisation whatsoever who, at any time
during the period of six months immediately preceding the Termination Date, was a Client of the
Company or any Group Company with whom the Employee had personal contact on behalf of the
Company or any Group Company;

(c) shall not directly or indirectly approach, solicit or deal with in competition with the Company or any
Group Company, any person who, at any time during the period of six months immediately preceding
the Termination Date, was a Temporary Worker of the Company or any Group Company with whom
the Employee had personal contact on behalf of the Company or any Group Company;

(d) shall not directly or indirectly approach, solicit or deal with in competition with the Company or any
Group Company, any person who, at any time during the period of six months immediately preceding
the Termination Date, was an Applicant of the Company or any Group Company and with whom the
Employee dealt on behalf of the Company or any Group Company;

(e) shall not, without the previous consent in writing of the Board and whether on the Employee’s own
account or for any other person, firm, company or organisation, directly or indirectly, provide
recruitment services to clients or candidates who operate in the same industry as the main industry
for which the Employee provided recruitment services on behalf of the Company or a Group
Company;

(f) shall not, without the previous consent in writing of the Board and whether on the Employee’s own
account or for any other person, firm, company or organisation, directly or indirectly, work for a client
of the Company or any end user of any Company client.

17.2 The Employee acknowledges and agrees:
(a) that, each of the restrictions in clause 17.1 constitutes an entirely separate and independent
restriction; also that the duration, extent and application of each of the restrictions are no greater than
is necessary for the protection of the interests of the Company and do not work harshly on the
Employee; and


(b) that, if any such restriction shall be adjudged by any court of competent jurisdiction to be void or
unenforceable as going beyond what is reasonable in the circumstances for the protection of the
interests of the Company, but would be valid if part of the wording thereof was deleted, the said
restriction shall apply within the jurisdiction of that court with such modifications as may be necessary
to make it valid and effective; and

(c) that, if requested by the Company (whether during or following termination of the Employment),
the Employee shall enter into a separate deed of covenant (containing substantially similar restraints
on their activities to those set out in clause 17.1) with any Group Company nominated by the
Company (and, if appropriate, the Company itself), and such deed shall be governed by the law of the
jurisdiction in which such Group Company is incorporated or carries on business.

17.3 The Employee shall not knowingly at any time make any untrue statement in relation to the
Company or any Group Company and in particular shall not after the termination of the Employment
hereunder for any reason wrongfully be represented as being employed by or connected with the
Company or any Group Company.

[Amethyst]

17.1 For a period of six months after termination of the Employment for whatever reason (including

breach of contract) the Employee: …

(f) shall not, without the previous consent in writing of the Board and whether on the Employee’s own

account or for any other person, firm, company or organisation, directly or indirectly, work for a client

of the Company or any end user of any Company client.

Six months is reasonable.

17.2 The Employee acknowledges and agrees:

(a) that, each of the restrictions in clause 17.1 constitutes an entirely separate and independent

restriction; also that the duration, extent and application of each of the restrictions are no greater than

is necessary for the protection of the interests of the Company and do not work harshly on the

Employee; and

Fair do.

Soooooooo, how does obtaining consent in writing from the Board seem like an option?

Otherwise damages or an injunction ( they can ask the court to uphold the clause in the agreement so you cannot work for the new employer until 6 months has passed ) - recent Supreme Court case

https://www.supremecourt.uk/cases/uksc-2017-0182.html


There's another case on here where the 'old' employer spoke to the 'new' employer and they just withdrew their offer due to non-compete clauses not having been disclosed at the time of the offer of employment. So that is another possibility - particularly if the client you intend to work for also intends to continue using the services of your current employer.

Not easy, so it is a good idea to try and get agreement and some kind of exclusion to the clause / settlement & confidentiality agreement from current employer before accepting new employer offer.

Just my thoughts though so wait see what anyone else thinks as well before doing anything - it could well be worth getting the opinion of an employment solicitor before making any decisions to try and protect yourself.

[Fuzzyduck]

Thank you, I understand. It sounds like the prudent course of action, before signing any documents, is to sit down with my CEO and see what their response is, and whether they would look to enforce that clause. The new company are aware of the non-compete.

As I would be merely informing them of my intention, as opposed to presenting them with an already-signed-and-sealed contract for the new company, I presume this would be the safest way to proceed and gauge the reaction. If the indication is that they will enforce, then gaining advice from an employment solicitor will be my next call.

Would welcome any further opinions on this from others, of course.

[ULA]

In my view this clause would be enforceable by the company, the only thing that may be questionable is whether the 6 months time limit is too long but effectively you signed up to the contract with those clauses in place.

I suggest that you speak with the CEO and see if you can get the necessary agreement to be able to work for the client although be expected to consider a compromise on the time limit if they are not inclined to waive the 17.1 (f) in its entirety.