Restrictive Covenants & Redundancy

[Everblend]

Hi all,


Long time lurker but I could really do with some advice on how to proceed.

I hold a very specialist role which very few people in the UK can perform (think professional role but just niche application however not employed to a high level, think equivalent to a band 6 nurse or assistant store manager).

Upon recruitment my contract was reviewed and some restrictive covenants added namely surrounding;


Working for competitors (strictly they do not exist but a blanket statement was written regarding other corporations who are not relevant) within six months

Taking clients I have worked with within the past 12 months within six months

Taking employees within six months

Working with suppliers (who might be the only people to supply a given product in the UK and does not clash with current products and working) within six months

There is no geographical restriction on these.


Now importantly none of my colleagues have these covenants, especially my counterpart who worked on a similar level (but who had received a secret promotion). In addition my notice period is only one month.

We are due to be given notice following a consultation period that our roles are to be made redundant as the location of work is closing. I will be paid a months notice in lieu in addition to the redundancy.

I have been told that these covenants are to stand, although the company will allow me to take a role elsewhere so long as they know where it is. They will not clarify whether I am able to fulfil my current duties nor what happens should a client visit for an appointment.

My questions are;

1. Should I be pushing for these to be absolved?

2. Are they legally enforceable?

I am due for them to answer some additional questions but so far they have been quite evasive and I would like to continue the role I do when I leave, but in a self employed capacity. As it stands, the current covenants will restrict this and also restrict me from earning a suitable living.


Hope this makes sense and thanks in advance!

[ULA]

I presume you signed up to the contract with restrictive covenants?

Since these restrictive covenants are written into your contract of employment then technically yes they are legally enforceable. Whether in fact they would be enforceable as being reasonable would be down to a court to decide if your, by then ex-employer, decided to take any action against you for infringing them.

You say that your location is closing, is the business still carrying on elsewhere? If so how are away from your current location?

I am just wondering whether, since this is a redundancy situation, there could be an argument for the company reducing the validity period of the clauses, or agreeing a geographic restriction as part of your leaving terms.

[Everblend]

Evening, thank you so much for taking the time to reply.

I did indeed, I was given little choice, it was either sign or don’t take the job. The contract was poorly worded and when I sought clarification on certain points in it they then inserted these clauses.

My counterpart has since moved on to another role externally in which he had no clauses, and as he was involved with more of the day to day running of the business, numbers, charges etc he ironically has had involvement with far more sensitive information which could be yielded to his advantage.

The business will not be continuing in the line of work which I participate (they are looking to sell but intend to close with immediate effect) hence why I am even confused as to why they would look to continue with these clauses.

I guess I was intending to argue the whole inequality but it seems that may not stand.

[ULA]

Given what you say, that they are not continuing in that line of work elsewhere geographically, then I am not sure what the point is of holding you to the restrictive covenants. My only thought is whether they think the company will somehow lose some if its sales value if a member of staff, who has left, could effectively set up in business or work for a competitor and "steal" customers away before any new buyer comes along, thereby devaluing the company sale price.

The problem you have is if you raise it as an issue to try and get some resolution and "release" from the clauses and they say no, then they may try and ensure they know what you do once you leave job wise. if that does contravene these clauses then they may try to bring a claim, however that would potentially be costly, they would need to prove reasonableness and potentially any loss they have suffered as a result of you breaching the restrictions. Are they likely to want to go through that process?

[Everblend]

That sounds like a potentially interesting though process and one in which makes sense.

However as it stands, the wording of the contract technically prohibits me from taking employment not only doing the job I am trained to do, but also working with another competitive entity in a different role (as they have named companies but stated not limited to).

As it stands, in theory I cannot take another role within the next six months without infringing on the contract anywhere in the UK, regardless of what that role is (even in a supermarket).

However they have since provided permission that I can take on another role so long as they are notified with whom it is, but the other restrictions still stand (so technically I can be employed but not do my job).

This is why I was expecting them to look at the covenants and realise they were a mistake.

I’ve perhaps played my hand too soon as I was expecting them to be revoked, but I have now asked specifically why I am in a position where these apply but they do not to the rest of the team who are in equally similar positions. The whole employment has frankly been fraught with inequality so this is just the icing on the cake!

[ULA]

Any chance that you can post up the specific clauses re: working for competitors and working for suppliers making sure any identifying information of you or the company you work for is redacted.

[Everblend]

The company basically operate in a specific sector, but they have a business which operates in a “premium” area if that makes sense offering services which you cannot obtain elsewhere within the group.

They have admitted throughout the consultation they would not be able to redeploy me within the business due to these niche skills.

[ULA]

In terms of enforceability the courts would not look favourably on a situation where restrictive covenants are so wide that you cannot make a living.

When they gave you "permission"

to take on another role so long as they are notified with whom it is, do you know if that applies to it being in a similar role to one you do now? I appreciate it cannot be for one of those listed companies or any that would be considered a competitor but i am trying to understand the extent of how restricted you may be. Is the role you do a transferable skill to another company not listed or one considered to be a competitor?