Want to start own business but under Non compete clause

[mojo2460]

Hi, I started working as a cosmetic repair technician in the building trade last November (too late for Furlough) The company covers the southwest of England with 8 technicians.
At the beginning of the year there was a drop off in work and so the other technicians were part time work and part time furlough. I was put on Zero hours. I received a letter stating " Your contract will be amended to a zero hours contract from 1st Feb 2021" I signed the letter but not seen anything else. During the last 3 months it has been obvious that the other technicians have been getting all the work and they have been using me to just do anything left over, about 2-3 days per week. Also during this time the boss has been advertising for another 2 technician's on full time contracts. So basically he is confident enough to take on more staff but it seems using my present status for the dead hours. I should say now that I am about to be put back on full time contract next month.

Now my question! In my contract I have a non compete clause for 6 months. Because of how I have been treated I would now like to become self employed doing the same work. If I was taken to court over this how would it be looked at, the fact that he put me on zero hours while advertising for more staff on full time contracts? I am guessing if I left now while on zero hours it would be in my favor but what about when I am back on full time contact. Would what has happened go against my employer? Also I guess I should say the clause covers the whole southwest, I would only be covering a small part of it

Any help gratefully received

[ULA]

Without see the document that you signed in full there may be a grey area.

However if the intention of the document you signed in Feb was to move you to a truly zero hours contract then the whole point of this type of contract in the way as the employer is not obliged to offer you work, you do not have exclusivity to that employer i.e. they cannot stop you working for anyone else. Since May 2015 is is against the law for an employer to prevent an individual who is employed under a zero-hours contract from working elsewhere.

[mojo2460]

Without see the document that you signed in full there may be a grey area.

However if the intention of the document you signed in Feb was to move you to a truly zero hours contract then the whole point of this type of contract in the way as the employer is not obliged to offer you work, you do not have exclusivity to that employer i.e. they cannot stop you working for anyone else. Since May 2015 is is against the law for an employer to prevent an individual who is employed under a zero-hours contract from working elsewhere.

Hi Ula, many thanks for the reply. I am attaching a copy of the letter I received in February and a copy of my original contract. Please could you take a look at both and give me your thoughts. From what I have read elsewhere it seems that perhaps the restrictions are quite wide, no area mentioned!

[mojo2460]

Ula, could you please have a look at my last post and give me any thoughts on the documents I have uploaded.
Many thanks
Pete

[ULA]

Please can you post up the zero hours contract document but ensure that it is anonymised.

[mojo2460]

Please can you post up the zero hours contract document but ensure that it is anonymised.

Sorry Ula, I thought I had. Here it is

[ULA]

The restrictive covenant clause in your main contract of employment is very clear. If you set up in business for yourself you would in my opinion be considered a competing business and something you could not do for 6 months after leaving your employer -clause 22.2.1.

You say in your post #3 no geographic area is mentioned but you have cut off the upload of your document part way through clause 22.4 so I cannot verify this.

However against this your employer has now put you on a zero hours contract which means that is is illegal for him to expect you to not accept work elsewhere and by definition that could be work you find yourself on a self-employed basis. You are also not obliged to accept work that is offered to you by this employer.

What is your ultimate aim to become self-employed?
OR
Do you want to have the option to take on self-employed work whilst you are on a zero hours contract to supplement your income until such times as your employer can provide you with full-time work again?

Once back on a full time contract and the terms of your orginal contract were reinstated then you the restrictive convenant could potentially be valid.

[mojo2460]

The restrictive covenant clause in your main contract of employment is very clear. If you set up in business for yourself you would in my opinion be considered a competing business and something you could not do for 6 months after leaving your employer -clause 22.2.1.

You say in your post #3 no geographic area is mentioned but you have cut off the upload of your document part way through clause 22.4 so I cannot verify this.

However against this your employer has now put you on a zero hours contract which means that is is illegal for him to expect you to not accept work elsewhere and by definition that could be work you find yourself on a self-employed basis. You are also not obliged to accept work that is offered to you by this employer.

What is your ultimate aim to become self-employed?
OR
Do you want to have the option to take on self-employed work whilst you are on a zero hours contract to supplement your income until such times as your employer can provide you with full-time work again?

Once back on a full time contract and the terms of your orginal contract were reinstated then you the restrictive convenant could potentially be valid.

I do really appreciate your comments Ula. Sorry for cutting of the last paragraph of contract!


The last relevant words are.

" Company or for any other reason, but would be valid and effective if part of the wording of it was deleted and/or any period or area referred to in it reduced in time or scope, such restrictions will apply with such deletions or modifications as may be necessary to make the valid and effective"


Sounds to me like they are saying that they can change anything to make it valid!!

Yes Ula, I am looking to start my own business doing the same thing but just on a small scale.

I think my zero hours will end at the end of the week. Ideally I would have like to have waited for another 6 months to start on my own for other reasons but if you think the contract sounds valid then I might have to finish this week and go for it to take advantage of the situation.


Think I have written somewhere that the contract refers to "trade secrets" The different practical things I do at work are all demonstrated by many people on Youtube so hardly secrets!!


I am also still querying the fact that no specific area is mentioned. We cover the whole Southwest of England where I am only looking to do business locally. I should state that my employers business is based 40 miles away from me.

Last question! If my employer puts me back on full time contract again should I be given another contract to sign or can he just say "you are now back on full time"?

Many thanks for your time

[ULA]

Restrictive covenants do generally have a geographic scope for completeness but I certainly cannot see one in your documents and I have reviewed a couple of times. At the end of the day the company would have to invest time and money to pursue any action against you if you did set up your own company and as you are looking to do something in your locale which is 40 miles away, from presumably their head office, this may be considered enough distance. I guess they are a large regional firm if they cover the whole of the south-west?

They would also have to try and prove their losses of you setting up in a competing business. Plus, if you did set up in business, I assume that you would be able, at least for six months, comply with 22.2.2 - 22.2.7. The clause that is effectively causing the problem is 22.2.1

All I can advise are on the terms as they are written in the contract and your potential arguments if they did decide to enforce. Whether they would or not I have no knowledge of.

[mojo2460]

Thanks again Ula, something that was confusing me and seems many other people also is that the fact the exclusivity clauses are quite different from non compete clauses. It is only exclusivity clauses that were banned from zero hours contracts and so my situation is the same if I started my own business now or when I'm back on full contract. Took me a lot of research to be sure of this as many people seem to think the clauses are the same!!!
Anyway if anyone has any comment on the so called "trade Secrets" I mentioned in my last message it would be good to hear from you.
Thanks

[ULA]

In general terms trade secrets include inventions, ideas, or compilations of data that are used by a business to make itself more successful.
Specifically, trade secrets include any useful formula, plan, pattern, process, program, tool, technique, mechanism, compound, or device that is not generally known or readily ascertainable by the public. Is there anything in the way that you do your role or the way in which the company operates that would cover this? If not it would be hard for them to argue that you have gained such knowledge in your employment.

[mojo2460]

OK, I got great help from my last wide question so trying to be a bit more specific with this question.
I work for a company that is based in a city in the southwest of England. The company is connected to the the building/home improvement trade and there are 10 of us that cover the whole of the Southwest. I wish to start my own sole trader business and work locally.
My non-compete contract does not include a geographical area at all so does this make the contract viable?
Also the non-compete mentions "Clients", non poaching etc. The company has no contracts with any of our customers. All of our customers (some big) can and and do use other company's that do the same thing we do so can they be classed as "Clients"
Thanks in advance for an views

[ULA]

Is this post related to your other post Want to start own business but under Non compete clause - LegalBeagles Forum

If so it is not helpful for those of us providing support to have to work through multiple threads on the same issue as we need to ensure consistency of advice being given.

If this is related I will merge the two threads.

[mojo2460]

Is this post related to your other post Want to start own business but under Non compete clause - LegalBeagles Forum

If so it is not helpful for those of us providing support to have to work through multiple threads on the same issue as we need to ensure consistency of advice being given.

If this is related I will merge the two threads.

Yes thats fine Ula
Thanks

[ULA]

A geographic area should be specified and an argument might be that without one it could be deemed to be limitless and therefore potentially too wide to be enforceable.

If they do business with your employer then they can be considered clients as indeed they are clients of the other companies they do business with.

If your employer wanted to stop you setting up your own business they would have to take out an immediate injunction against you which would be a costly process for them and they could only recover any legal costs if they won their claim.