Post Termination clauses

[Benten]

Hi, new here, sorry for the long post but a bit of background…

I worked for X, then Y bought the part of X I worked for and the technology X developed.

X is still allowed to use the technology in non-competing areas

X is finalising a product they were developing when Y bought the technology - this product will be used by Y in the sector X can no longer compete in with Y

I am the go-between at Y who is supporting X in delivering on time and minimise risk.


Am I allowed to resign from Y in a technical execution role and go work for X immediately in more of a technical authoritative role? X may want me to support issues on the deliveries to Y when I join - is this allowed?


The reason I ask is my new employment contract with Y has the following clause…


6. POST-TERMINATION RESTRICTIONS

6.1 Upon the signing of this Agreement, or reasonably soon thereafter, and in any event prior to the termination

of the Employment, the Company may make available to the Employee and the Employee will receive

commercial and/or technical information belonging to the Company (including the information described in

clauses 2 and 5 of this Agreement) that is Confidential Information. The Employee recognises and

acknowledges that this Confidential Information constitutes valuable trade secrets belonging to the

Company.


6.2 The Employee agrees that in the Relevant Area, the Employee will not, alone or through employees or agents

or otherwise, and whether directly or indirectly or on the Employee’s behalf or on behalf of any person

during the Restricted Period, work for or assist (whether as an owner, employee, consultant, contractor or

otherwise) any business or commercial operation whose business is or seeks to be in competition with those

parts of the business of the Company or any Group Company with which the Employee was involved to a

material extent during the Relevant Period.


6.3 The Employee further agrees that, during the Restricted Period, the Employee will not, alone or through

employees or agents or otherwise, and whether directly or indirectly or on the Employee’s own behalf or on

behalf of any person:

6.3.1 solicit business from or canvas any Customer of the Company and/or any Group Company in

respect of the Restricted Goods and/or Restricted Services applicable to the Company or such

Group Company in competition with the Company or such Group Company (as appropriate);

6.3.2 accept orders from, act for or have any business dealings with, any Customer of the Company

and/or any Group Company in respect of the Restricted Goods and/or Restricted Services

applicable to the Company or such Group Company in competition with the Company or such

Group Company (as appropriate).

6.3.3 solicit or induce or endeavour to solicit or induce any Supplier to cease to deal with the Company

and/or any Group Company or interfere in any way with any relationship between a Supplier and

the Company or any Group Company.

6.3.4 solicit or induce or attempt to solicit or induce any person who, on the Termination Date, was a

Key Personnel of the Company or any Group Company and with whom the Employee had material

dealings during the course of the Employment, to cease working for or providing services to the

Company or any Group Company, whether or not such person would thereby commit a breach of

contract;

6.3.5 employ or otherwise engage any Key Personnel of the Company or any Group Company with

whom the Employee had material dealings during the course of the Employment.

[atticus]

Anyone advising you will need a lot of information, such as:

When did the business transfer take place?

Have you signed the new employment contract?

Is X in the Relevant Area?

Is X a competitor of Y?

The extracts you have quoted include half a dozen defined terms, e.g Restricted Period, Relevant Area. The definitions will be elsewhere in this agreement.

[Benten]

Hi thanks for the response, please see answers below...

When did the business transfer take place? - Around end of 2023, we were TUPE'd to an 'interim' company with no contractual change, then just recently TUPE'd again to the final company with contractual changes to align all parts of the business.

Have you signed the new employment contract? - Yes

Is X in the Relevant Area? - X used to be in the same field as Y as a competitor, but since Y purchased the technology and division of X, now X can never work in that field again to compete with Y. X can only work in the same field as Y to help finalise the product X was developing before the transfer and to handover all technical knowledge from X to Y

X can still use the same technology that they developed, that Y now owns, but X can never use it to compete against Y

Is X a competitor of Y? - No, as above, they are not allowed to compete in the same field as Y, but X can still use the same technology that they developed, that Y now owns in non-competing fields

In addition, all my 'confidential knowledge' has come from my time at X, as I have had no real insight into the technologies developed by Y to this date other than public information. The new role is technical, not commercial, but would be more of a technical authority deciding how technologies will be used rather than purely design execution.



Details of definitions below....

1. DEFINITIONS

Customer means any person or entity to whom the Company or any Group Company distributed, sold or supplied Restricted Goods or Restricted Services, or had discussions or negotiations or was invited to tender regarding the possible distribution, sale or supply of Restricted Goods or Restricted Services, during the Relevant Period and with which, during that period, either the Employee or any employee under the direct supervision of the Employee, had material dealings in the course of the Employment;

Company Intellectual Property means any and all ideas, discoveries, inventions, improvements, designs, databases, information, copyright works, know-how, processes, methodologies, reports, records, notes, formulae, software, writings, developments and/or any item equivalent or similar in nature to any of the foregoing on any media whatsoever (whether electronic or in writing, including all copies and abstracts of such), authored, conceived, developed, made, devised, discovered or reduced to practice by the Employee directly or indirectly (either solely or jointly with others) during the term of the Employment and (a) during the Employee’s working hours, or (b) at the Company’s expense or the expense of any Group Company, or (c) using any of the Company’s materials or facilities
or the materials or facilities of any Group Company, or (d) that relates to the business of the Company or any Group Company or to the research or development of the Company or any Group Company. Company Intellectual Property also includes any Pre-existing Intellectual Property assigned, licensed, or transferred to the Company, and any Preexisting Intellectual Property in which the Company has a vested or executory interest;

Confidential Information means any and all information in any form or format relating to the Company or any Group Company (whether communicated orally, electronically, by inspection of materials, parts or equipment or in writing) which is identified or designated as confidential or which would by its nature be considered confidential by a reasonably prudent person with no special knowledge of the Company’s business, including all business, business plans and/or business opportunities, finances, existing or potential customers, contractors, suppliers, staff partners, contractual arrangements, affairs, Company Intellectual Property, IPR and products (including product development plans and existing or potential research and development activities); and all past, current or proposed operations,
methods, policies, procedures, processes, techniques, plans, specifications, know-how, designs, manufacturing information, technologies, ideas, concepts, trade secrets and software (including all code, in object, source or other form), and all notes, records, data, reports, formula, schema and other information relating to any of the foregoing
of the Company or any Group Company, regardless of whether such information relates to the past, present or potential future of the Company or any Group Company;

Group Company means in respect of the Company, another person that controls, is controlled by, or is under common control with, the Company, where “control” means the power of a person to secure, directly or indirectly, that all or substantially all of the affairs of the other person are conducted in accordance with its wishes (whether such power is enjoyed through the holding of shares, possession of voting rights, a provision of the articles of association, constitution, partnership deed or other document regulating the affairs of any person or otherwise). In particular, a person shall be deemed to control a body corporate if: (a) they hold a majority of the voting rights in the body corporate; or (b) they have the right to appoint or remove a majority of the directors of the body corporate,
and “Group” shall be construed accordingly;

IP Disclosure Form means a form to be submitted to the Company by the Employee pursuant to clause 3 in substantially the same form as Appendix 1 hereof; IPR means all patents, registered trade marks, registered designs, (including any applications for any of the foregoing, and any right to apply for the foregoing), copyright, neighbouring rights, rights in the nature of copyright, database rights, rights in trade names, business names, trading names, domain names and product names, rights in know-how, rights in proprietary and Confidential Information, rights in inventions and all other industrial and
intellectual property rights and all other rights or forms of protection having equivalent or similar effect to any of the foregoing arising anywhere in the world;

Key Personnel means (a) any person who was a director, senior employee or a manager of the Company or any Group Company at any time within the Relevant Period who by reason of that position and in particular his seniority and expertise or knowledge of Confidential Information or knowledge of or influence over any Customer or Supplier of the Company or the Group is likely either (i) to cause damage to the Company or the Group if he were to leave the employment or service of the Company or the Group or (ii) to be of material assistance to any individual, company, partnership or other entity seeking to compete with the Company or the Group; and (b) any person who was employed or engaged by the Company or any Group Company and who worked closely with the Employee within a team, branch or business unit during the Relevant Period;

Parties means the Company and the Employee;

Pre-existing Intellectual Property means all IPR that was authored, conceived, developed, or reduced to practice by the Employee before the term of the Employee’s employment with the Company began;

Restricted Goods means any product, equipment or machinery researched into, developed, manufactured, distributed or sold by the Company or the Group and with which the duties of the Employee were materially concerned, or for which the Employee was responsible, during the Relevant Period, or any product, equipment or machinery of the same type or materially similar to that product, equipment or machinery;

Restricted Services means any service (including but not limited to technical and product support, technical advice and customer services) supplied by the Company or the Group and with which the duties of Employee were materially concerned, or for which he was responsible, during the Relevant Period, or any service of the same type or materially similar to that service;

Relevant Period means the period of twelve months immediately preceding the Termination Date;

Relevant Area means the UK

Restricted Period means the period commencing on the Termination Date and continuing for 6 months, which period may be subject to increase or decrease by written agreement between the parties at any time prior to the Termination Date;

Supplier means any supplier, agent, distributor or other similar person who, during the Relevant Period was regularly dealing with the Company or any Group Company and with which, during that period, the Employee, or any employee under the direct supervision of the Employee, had material dealings in the course of the Employment;

and

Termination Date means the date the Employment terminates.

[Benten]

Details of definitions below, they are too large for 1 post, so I will split into several....

1. DEFINITIONS

Customer means any person or entity to whom the Company or any Group Company distributed, sold or supplied Restricted Goods or Restricted Services, or had discussions or negotiations or was invited to tender regarding the possible distribution, sale or supply of Restricted Goods or Restricted Services, during the Relevant Period and with which, during that period, either the Employee or any employee under the direct supervision of the Employee, had material dealings in the course of the Employment;

Company Intellectual Property means any and all ideas, discoveries, inventions, improvements, designs, databases, information, copyright works, know-how, processes, methodologies, reports, records, notes, formulae, software, writings, developments and/or any item equivalent or similar in nature to any of the foregoing on any media whatsoever (whether electronic or in writing, including all copies and abstracts of such), authored, conceived, developed, made, devised, discovered or reduced to practice by the Employee directly or indirectly (either solely or jointly with others) during the term of the Employment and (a) during the Employee’s working hours, or (b) at the Company’s expense or the expense of any Group Company, or (c) using any of the Company’s materials or facilities
or the materials or facilities of any Group Company, or (d) that relates to the business of the Company or any Group Company or to the research or development of the Company or any Group Company. Company Intellectual Property also includes any Pre-existing Intellectual Property assigned, licensed, or transferred to the Company, and any Preexisting Intellectual Property in which the Company has a vested or executory interest;

Confidential Information means any and all information in any form or format relating to the Company or any Group Company (whether communicated orally, electronically, by inspection of materials, parts or equipment or in writing) which is identified or designated as confidential or which would by its nature be considered confidential by a reasonably prudent person with no special knowledge of the Company’s business, including all business, business plans and/or business opportunities, finances, existing or potential customers, contractors, suppliers, staff partners, contractual arrangements, affairs, Company Intellectual Property, IPR and products (including product development plans and existing or potential research and development activities); and all past, current or proposed operations,
methods, policies, procedures, processes, techniques, plans, specifications, know-how, designs, manufacturing information, technologies, ideas, concepts, trade secrets and software (including all code, in object, source or other form), and all notes, records, data, reports, formula, schema and other information relating to any of the foregoing
of the Company or any Group Company, regardless of whether such information relates to the past, present or potential future of the Company or any Group Company;

Group Company means in respect of the Company, another person that controls, is controlled by, or is under common control with, the Company, where “control” means the power of a person to secure, directly or indirectly, that all or substantially all of the affairs of the other person are conducted in accordance with its wishes (whether such power is enjoyed through the holding of shares, possession of voting rights, a provision of the articles of association, constitution, partnership deed or other document regulating the affairs of any person or otherwise). In particular, a person shall be deemed to control a body corporate if: (a) they hold a majority of the voting rights in the body corporate; or (b) they have the right to appoint or remove a majority of the directors of the body corporate,
and “Group” shall be construed accordingly;

IP Disclosure Form means a form to be submitted to the Company by the Employee pursuant to clause 3 in substantially the same form as Appendix 1 hereof; IPR means all patents, registered trade marks, registered designs, (including any applications for any of the foregoing, and any right to apply for the foregoing), copyright, neighbouring rights, rights in the nature of copyright, database rights, rights in trade names, business names, trading names, domain names and product names, rights in know-how, rights in proprietary and Confidential Information, rights in inventions and all other industrial and
intellectual property rights and all other rights or forms of protection having equivalent or similar effect to any of the foregoing arising anywhere in the world;

[Benten]

Double post - IGNORE

[Benten]

Double post - IGNORE

[Benten]

I posted a response and a list of all definitions, but the system thinks its spam, so needs to be approved by an administrator? Can this please be performed?

[atticus]

EXC - please clear OP's reply

[EXC]

I posted a response and a list of all definitions, but the system thinks its spam, so needs to be approved by an administrator? Can this please be performed?

Sorry, you're right, something in your posts tripped the spam filter. I've approved a selection of 3 of your posts.

[atticus]

Is X in the Relevant Area? - X used to be in the same field as Y as a competitor, but since Y purchased the technology and division of X, now X can never work in that field again to compete with Y. X can only work in the same field as Y to help finalise the product X was developing before the transfer and to handover all technical knowledge from X to Y

You missed that

Relevant Area means the UK

I assume that X is in the UK.

------

It seems clear that clause 6.2 of these restrictions may bite, but if X does not compete with Y, it does not. I assume 6.3 and its sub clauses is not relevant

There may be reasons why the restrictions might be considered to broad, whether in geographical area or length of time. This will require greater understanding of your role and of Y and its business. Nothing is certain in this area, and you do not want to be tied up in expensive litigation, whatever the outcome.

One way forward might be for you to speak to your employers at Y to seek their agreement - might it actually benefit them for your expertise to be used by X?

[Benten]

Sorry, yes both X & Y are in the UK.

X is legally not allowed to compete with Y since Y purchased the rights to the technology developed by X.

My role at Y is as an engineer in the energy sector (hydrocarbons). I work with electronics control systems, developing them, testing them, supporting them as they are delivered and essentially taking a level of technical ownership from an execution (design / development / test) standpoint.

At the moment I am an engineering interface between X & Y, taking on part of the knowledge transfer from X into Y and ensuring X are delivering what is agreed and helping with engineering issues / obstacles that come up.

At X they are moving away from hydrocarbon energy sector and into renewable energy. They are not allowed to operate in hydrocarbons since Y took ownership of the technology.

X will support Y with the finalising of the new product and X will handover all technical knowledge to Y and X will support Y as per an agreed frame agreement

Outside of Xs direct involvement with Y, X will move into renewables, using the same technology sold to Y (as agreed between X & Y).

The new role is more taking ownership of the system rather than executing the design. So making decisions on what the system should do, how it needs to perform, unblocking obstacles for engineers and overseeing the various engineering disciplines to ensure each one is properly providing what is required to make the full final system work as intended.

X may want me to work on what they are delivering to Y due to me already having knowledge of the product to help overcome engineering obstacles which are cropping up and ensure that what is being delivered adheres to what it should be and if not, all parties are in agreement of what changes are needed and why.

Would any of the above pose an issue in my situation?

[atticus]

As I intimated in post #10, the key question is whether X is a competitor of Y.

Tagging ULA - anything to add?

[Benten]

As I intimated in post #10, the key question is whether X is a competitor of Y.

Tagging ULA - anything to add?

The answer to that is very clear cut - No X is not a competitor of Y as I have detailed above.

So sounds like its not an issue because of that 1 fact.

[ULA]

If Y has excluded X as being a competitor by way of the business puurchase, then this would be the main issue in whether your restrictive covenants are enforceable.

Potentially this should not then be an issue.

As atticus hss suggested it is always best in these situations to discuss with your employer but in a positive way that you do not believe any restrictions apply in this case as X is not deemed by Y to be a competitor.

[Benten]

Thanks to both of you - in regard to discussing with my employer, I suspect there may be some friction purely in the sense that Y is trying to pull away from X as soon as possible to avoid the high costs they are paying and if they see me as getting poached it will not land too well.

But X is 100% not a competitor of Y, they are legally not allowed to be, ever, unless they develop a brand new technology that Y has no right to, which would take years (my restrictive period is 6 months).

At this time X has no interest in competing with Y in hydrocarbons and they are focussing on renewables.

Y has no interest in renewables and is focussed purely on hydrocarbons.

So it seems (based on what has been discussed) clear cut that me leaving Y to join X (in any fashion) is not a breach of my T&Cs as X is either supporting Y or involved in non-competing sectors and there is no overlap between them.