Restrictive Covenants in Contract

[brettf76]

Hi Everyone,
and thanks for looking at this in advance. I worked for a company for 12 months and I was not a manager or Director in fact I was only just above a trainee in the company chart!
I left after 12 months to start a new company in a different sector offering business services/advertising, which was completely different from what my last company offered, however some ex-clients also use my services.
I have now received a letter from my previous employers solicitor informing me I cannot work or set up any company that may have similar clients even though it offers different services for 18 months.
The contract in short makes me unemployable for 18 months, it also states that this is a blanket covenant but states no geographical location with the inference that I cannot work in my former field or a new one.
Is this enforceable they are even demanding compensation for lost revenue, but I don't understand how this is possible?
Any advice greatly appreciated.

[nemesis45]

Re: Restrictive Covenants in Contract

Hi,

Did you actively promote your services to your ex employers customer base?

I would need to see the contract and the restriction clauses to be able to define
if they are unreasonable and/or unfair.

Does your ex employer offer the identical to those you provide or are they just vaguely similar?

[brettf76]

Re: Restrictive Covenants in Contract

Hi Nemesis45,
Thank you for taking time out to reply to me, much appreciated.
The covenants are:

“The Employee agrees that for a period of eighteen (18) months after the termination of this
Agreement that the Employee must not:
(a) serve under any person or company or firm carrying similar Trade or business which is a
competitor of “The Company” unless prior permission of the Managing Director is given in
writing.
(b) shall not be interested directly or indirectly in any manner as a partner, officer, director,
shareholder, advisor, employee of any other company / business similar to that of “The
Company” or any allied trade without the written permission of the Managing Director.
(c) solicit, canvass, approach or accept any approach from any person or organisation who
was at any time during the Employee’s period of employment with the Company a client of
the Company with a view to obtaining the custom of that person or organisation in a
business that is the same or similar to the business carried on by the Company;
(d) interfere in any way whatsoever with the relationships between the Company and its’
clients, supplies or employees;”

They don't offer the same services at all, and I am dealing generally with different people in the organisation.
I have been approached by some ex-contacts who are more then happy to put this in writing.

[des8]

Re: Restrictive Covenants in Contract

This is a subject discussed back in September here: http://www.legalbeagles.info/forums/...nts+employment
You might find it worth a read

[nemesis45]

Re: Restrictive Covenants in Contract

I think the terms are harsh and unreasonable.

May I ask please the definition of your business and its aims and that of your ex employer I suspect connections may be tenuous and
there is some possibly vexatious tendencies in their actions.

[brettf76]

Re: Restrictive Covenants in Contract

Hi Des8,
Thank you for your reply and link, it looks most helpful.

I will go away and read through it in detail.

Thank you

[brettf76]

Re: Restrictive Covenants in Contract

Hi Nemesis45,

I used to be a recruitment consultant and left to set up a job board for agencies and clients to advertise there vacancies in a niche that I did not have anything to do with whilst working there.
I do not offer any similar services. They themselves use similar services themselves, so was shocked that they have taken this course of action. I did not hide it from them and was even congratulated by my manager who is still there. Two other colleagues left at a similar time and went to work for direct competitors, offering the same services and they have had no legal action taken against them.

[nemesis45]

Re: Restrictive Covenants in Contract

I am inclined to support previous advice and advise you to ignore the solicitors letter, especially as you do not seem to have " encourage" the employers clients to us your services they have done so of their own free will.

[brettf76]

Re: Restrictive Covenants in Contract

Hi Nemisis45,
I did take that approach initially but then my ex employer gave their solicitor my personnal mobile tel no and he began calling me from his mobile rather strangely rather then his office number!

[MissFM]

Re: Restrictive Covenants in Contract

Hi Nemisis45,
I did take that approach initially but then my ex employer gave their solicitor my personnal mobile tel no and he began calling me from his mobile rather strangely rather then his office number!

What an odd thing to do! :tinysmile_hmm_t2:

Was the letter a Letter Before Action? If so I think it would be foolish to ignore it, even though I agree with the posts above saying that the covenant is, on the face of it, unreasonable and unenforceable.

Take heart though, this from one of Des8's links on a previous thread seems to say it all:

When drafting restrictive covenants, employers often give little consideration to the scrutiny that those covenants may later come under by the courts. In this case, the employer struggled to justify a 12 month non-competition restriction. The employer sought (without success) to rely on its need to protect its confidential information and customer connections. An employer should carefully consider and document the reasons why it requires a particular period of restriction and this should be varied depending on the level of seniority of an employee within a business. A simple blanket six or 12 month restriction for all employees will not be sufficient and a “one size fits all” approach should be avoided;

http://www.doyleclayton.co.uk/blog/p...ition-covenant

I do think it's worth taking specialist legal advice (even if it's just the free initial consultation). If nothing else, it will put your mind at rest :tinysmile_twink_t2: xx

[teaboy2]

Re: Restrictive Covenants in Contract

Its unenforcable

Restrictive convenants are only enforceable if your in the same industry/trade, if ex-employer supplies Toner Cartridges and inks only, but your company supplies a fuller range of office supplies including Inks and Toners, your not actually in the same industry. As they are in the IT supplies, whilst your in the office consumables/supplies and more likely a wholesaler/retailer of office products, where as their industry is purely IT supplies/consumables.

Not only that, if they only have a small customer base through the UK they can not prevent you working outside a limited radius from their location within the same industry in the UK. I.e. regardless of whether their customers are widespread throughout the UK, if their numbers are small, (population of a town for example) then only time a restrictive covenant would be enforceable would be if it only stopped you working for a competitor within the same industry within a radius of say 10 miles.

finally you also have length time, its very rare for a court to enforce restrictive covenants that exceed 12 months, yours is 18 months.

Plus in order to enforce, they would have to prove you had poached customers, they had suffered financial detriment from loss of custom, and prove your in the same industry.

Can i ask what it is your ex employee does, and what it is you do? We can then help you write up a response to their letter.

Also how many times has their solicitor tried contacting you by phone?

Also these guys specilise in restrictive covenants, even they say many are unenforceable, maybe worth giving them a call - http://www.slatergordon.co.uk/employ...ive-covenants/

[wales01man]

Re: Restrictive Covenants in Contract

Is the OP sure it is a Solicitor phoning? Would think this is very unusual

[brettf76]

Re: Restrictive Covenants in Contract

Thank you all for your replies. The solicitor has called me twice, I only answered once as I thought it was very strange for him to call from a mobile.
My ex employer offers temporary, permanent and contract recruitment, I however dont offer any of these services at all. I run an advertising website a bit like reed or monster but for a smaller specialist area.
I couldn't find any reference to an 18 month covenant anywhere, I felt it ls quite over the top.

[brettf76]

Re: Restrictive Covenants in Contract

Thank you all for your replies. The solicitor has called me twice, I only answered once as I thought it was very strange for him to call from a mobile.
My ex employer offers temporary, permanent and contract recruitment, I however dont offer any of these services at all. I run an advertising website a bit like reed or monster but for a smaller specialist area.
I couldn't find any reference to an 18 month covenant anywhere, I felt it ls quite over the top.

[teaboy2]

Re: Restrictive Covenants in Contract

So basically your website is like a job search site where your ex employer would advertise their clients vacancies? So you yourself do not deal with employer clients directly/primarily but with agencies listing their clients jobs?

Can you PM me a link to your website and to your ex-employers so i can get a clearer picture of the difference between what your doing and what they do?

"I couldn't find any reference to an 18 month covenant anywhere, I felt it ls quite over the top." - That's because they highly likely to not be enforced by a court and therefore unenforceable!

Also PM me the name of the solicitor and solicitor firm they work for, i can then check SRA see if they are registered to practice or even a solicitor at all!