Restrictive Covenants - contract of employment

[Scientist123]

I am resigning from my current role to join a new company, but my contract includes a restrictive covenant/non-compete clause (copied below):

"...Subject to the provisions below, during the Employee’s employment by or service with XXXXXXXX and continuing for the period ending six months after termination of all employment and services with XXXXXXXX, howsoever arising, the Employee shall not directly or indirectly:-
1.1.1. perform or provide any Services for any Competitive Organization
1.1.2. perform or provide any Services that are competitive, in whole or in part, with any Covered XXXXXXXX Offering; or
1.1.3. perform or provide any Services for any Person that would reasonably desire to use the Employee’s knowledge of XXXXXXXX confidential or trade"

I am waiting to hear from HR on their interpretation of this restrictive covenant, but would like to be prepared. My understanding is that these covenants are enforceable but should be designed to protect legitimate business interests and no wider than reasonably necessary.

The industry is clinical research (development of pharmaceutical products for pharma companies). My new employer has confirmed that I will not be assigned to work in the same therapeutic areas as I am currently working in for the first 6 months, but the covenant seems to restrict me entirely from working for a competitor.

There is an additional consideration - "the duration of the Restrictive Period after the termination of the Employee’s employment will be reduced by any period of time that the Employee has spent on garden leave immediately prior to the Termination Date."

These terms were in my original contract and have not been amended during the 2yrs that I have been with my current employer.

Any advice or thoughts on this restrictive covenant would be really appreciated as this is something of a concern. I can't afford to be unemployed for 6 months before starting new employment.

[ULA]

In regard to the restrictive covenants:

1.1.1 covers any service for any competitior organistion. In the fullest sense of this clause it means that you cannot do any job for a competitor company even if you "will not be assigned to work in the same theapeutic area."

If there has been no reason to amend your original contract in the 2 years you have worked there, then that is not a reason for this clause not to continue to apply.

True, restricitve covenants are about protecting the business, so for me you may have to rely on the fact that your current employer may be less inclined to enforce the clasue because, although going to a competitor, it is in a different area of research from your present role. Although this does contradict clause 1.1.1 in terms of proportionality, the situation would be more difficult if you were moving into the same area as you currently work in. Also does the competitor have any research in your current area of work? if not then again that may lessen the proportionality of the issue, as your current employer could not be concerned about you passing on valuable information.

[Scientist123]

Thank you for you response. Both my current and new employer are large global organisations that cover the full spectrum of therapeutic areas, so unfortunately that distinction would not hold. The understanding would be reliant on an internal “firewall” separating me from my previous therapeutic areas for a period of 6 months.

I appreciate that term 1.1.1. is all encompassing, but taken to it’s fullest extent I couldn’t even work in the mail room of a competitor organisation, which seems unreasonable and goes beyond protecting a legitimate business interest. I understood that restrictive covenants had to be quite specific and a catch all blockade such as this might be frowned upon.

[ULA]

Just thinking in terms of enforceabiltiy is there any geographical limit to your restricitive covenants?

[Scientist123]

Just thinking in terms of enforceabiltiy is there any geographical limit to your restricitive covenants?

Yes, it's limited to UK.

[ULA]

A UK wide geographical area could be helpful to your case alongside the wide nature of 1.1.1.

It may be worth seeing what your HR department comes back with and then you will know, if they do have an issue, what it is based on specifically. If there is an issue or you have any other questions then please just come back to this thread.

[Scientist123]

A UK wide geographical area could be helpful to your case alongside the wide nature of 1.1.1.

It may be worth seeing what your HR department comes back with and then you will know, if they do have an issue, what it is based on specifically. If there is an issue or you have any other questions then please just come back to this thread.

Thanks, I really appreciate your incite. Hopefully I should be hearing back from my line manager tomorrow regarding HR's interpretation of my contract and how strictly they wish to implement the restrictive covenants.

[Scientist123]

A UK wide geographical area could be helpful to your case alongside the wide nature of 1.1.1.

It may be worth seeing what your HR department comes back with and then you will know, if they do have an issue, what it is based on specifically. If there is an issue or you have any other questions then please just come back to this thread.

I heard back from my HR folk, they have decided to be pragmatic, I will be on garden leave from January and then they are happy to go with the agreement that I will not work on the same therapeutic areas for the reminder of the restricted period when I start my new role. Happy enough with that, I get a couple of month rest and relaxation on full pay (very much needed after the last 12 months as I have been involved in supporting multiple covid vaccine development programs as well as supporting a selection of respiratory clinical trials that needed my input - crazy crazy year).

Anyway, a big thank you Ula for taking the time to answer my questions and share your expertise. Wishing you a happy Christmas and hopefully a more sane 2021

[ULA]

Glad to hear that your company have taken that view.

Sounds like you deserve a break before you start your new job. Happy Christmas to you