Restrictive contract terms surrounding outside of work activities and investments?

[david1987]

Hello, hope someone can shine a legal light.

I work full time at a private company and have been there for years. nothing out of the ordinary, normal industry.
Anyway, I recently have been given the opportunity to invest in my friends business and I belive in her and the vision and want to take said opportunity. I will give her some of my monies and some of my advice in exchange for 5% equity in her Ltd Company.

However, on reading through my employment contract it says this...


"You may not be employed or engaged in any other business during your employment without prior written agreement of the company. If you have another job or are considering taking up another job you should therefore speak to the Board Directors as soon as possible.

You shall not at any time during your employement (except as a representative of the Company or with consent in writing of the Company) be directly or inderectly engaged or concerned or interested in the conduct of any other trade, business or occupation whatsoever, nor shall you be directly or indirectly interested in any such business which competes with the company or any Group Company, save through your holding or being interested in investments (but only in a public company or companies listed on any regonised investment exchange) not representing more than 3% of the issued investments of any class of any one such company."

So the way I read above... I am not allowed to invest and take shares in her company via a private deal? even on my own time? Seems a bit much no?
Also the way I read it, I am allowed to buy holdings in PLC companies, but not more than 3%? Why on earth not? Surely I decide how much I want to invest with my own money?

Sorry for the moan, don't want to come over all "union" like (I am not). But I don't like the idea of my employer dictating what I can do or invest in in my own time. So what is the legality of this?

[paulajayne]

"which competes with the company " :-- Is pertinent - does it?

[david1987]

"which competes with the company " :-- Is pertinent - does it?

no, absolutely not.

But it says

You shall not at any time during your employement be directly or inderectly engaged or concerned or interested in the conduct of any other trade, business or occupation whatsoever

Then "nor shall you be directly or indirectly interested in any such business which competes with the company"

The "whatsoever" and "Nor shall you" seem to be worded as an "in addition to" rather than the sole restriction.

It seems to suggest that both are restricted.

[paulajayne]

Contract law is not my area of expertise - others may be able to advise. Does seem a bit extreme though.

[Celestine]

It seems very extreme, probably to the extent of being unreasonable and therefore unenforceable.

I can't see how your private investment plans can be policed by your employer. Contracts often contain clauses which are 'belt and braces' but this is just silly.

[ULA]

On reading through the clause then the section relevant to your situation appears to be:

You shall not at any time during your employement be directly or inderectly engaged or concerned or interested in the conduct of any other trade, business or occupation whatsoever

Potentially what you are proposing with your friend's business would be restricted. However it does say "or with consent in writing", which means that you would need to speak with your employer about what you are wanting to do in terms of investment and see if they will consent. You would proably have to confirm they do not compete with your employer, what industry they are in and an average number of hours per week you will be providing advice.

[david1987]

On reading through the clause then the section relevant to your situation appears to be:

You shall not at any time during your employement be directly or inderectly engaged or concerned or interested in the conduct of any other trade, business or occupation whatsoever

Potentially what you are proposing with your friend's business would be restricted. However it does say "or with consent in writing", which means that you would need to speak with your employer about what you are wanting to do in terms of investment and see if they will consent. You would proably have to confirm they do not compete with your employer, what industry they are in and an average number of hours per week you will be providing advice.

I can certainly prove it doesn't compete with my employer (not even the same industry). I just begrudge having to go and ask my employers permission to do things in my own time, with my own funds. I'm not sure how they can have that amount of control over my life.

[david1987]

Is it worth running it past legal aid or what? Not sure my next steps?

[ULA]

Unfortunately, I accept situations change and since you have been with your employer several years you may not have foreseen an opportunity like this arising with your friend when you accepted the terms of the contract.

Also unfortunately for such an issue as this you will not get legal aid. Your choices are either to speak to an employment law solicitor or just go directly to your employer and speak with them to get their written consent. I have no idea what your employer is like, are they likely to with-hold consent to such a request?

[david1987]

OK, well the plot thickens.

I have been offered a part-time position at another firm. weekend work. It won't affect my current weekday job. But as per my contract above, I have to request permission from "the company" to do this. With this in mind I approached my superior who told me that the board wasnt reconveining until November, So I wouldn't be able to put it to them until then. By which time obviously the weekend job I have been offered will be gone.

Is it fair for them to make me wait that long? this is getting so messy.

[ULA]

Maybe you could send an email to all board members requesting to be able to take on this new weekend work. Explain you understand they are not meeting as a group until Nov however the response that you need to provide this potential new employer is time sensitive, so could they make a decision in advance of the meeting.

[david1987]

Maybe you could send an email to all board members requesting to be able to take on this new weekend work. Explain you understand they are not meeting as a group until Nov however the response that you need to provide this potential new employer is time sensitive, so could they make a decision in advance of the meeting.

I don't have access to the board members. It would need to be via my supervisor, who is saying that I will need to wait until November to submit the request. She is digging on her heels and making it as difficult as possible for me. Can they just indefienately say wait? I mean it's like I cant do anything on my own time without asking the company who then have no time limit to get back to me? What the hell?

[ULA]

Do you have an HR department you can talk to about the situation?

[david1987]

Do you have an HR department you can talk to about the situation?

No, it's very small.

[ULA]

Then you will need to go to your supervisor's manager as an alternative.