Non Compete Clause

[reptile]

Hello,

My Wife has a non compete clause in her contract.

She is not allowed to work for a competing company for a period of 12 months after handing in her notice.

She is not earning huge money and is the only wage earner in our household.

She has been offered another job working for competing company.

Can anybody please tell me how enforceable this is likely to be? Surely a Judge is not going to stop her from earning a living in the only industry that she knows? We could not afford for her not to work for three months let alone 12.

What is our best course of action here please?

I have attached the terms that are in her contract.

I am willing to pay for advice if necessary.

Thank you in advance,

Reptile

[R0b]

Re: Non Compete Clause

What was her job role? was she a junior employee or someone senior within management?

For a valid non-compete it must be there to protect the interest of the business and no wider than reasonable to protect that interest.

If she is in a junior role it could be deemed unenforceable, but that also depends on the size of the business too, a junior employee in a business with an overally number of 12 employees will have a much bigger impact than one which has thousands of employees.

If she is in a more senior role then it may be likely that the restriction will apply. If she signed the agreement in a junior role but was later promoted to a senior role it could be unenforceable as it applied at the time she was a junior. Although if she signed a new contract in a senior role then it will probably apply.

She can however apply for jobs in other sectors e.g. if she works in IT industry the restriction would not prevent her from working within the food industry for example.

non-compete clauses are pretty common these days for people in senior roles but are unlikely to apply where a person is in a more junior role.

If you are will to pay for advice, best off paying for that advice even if it is a summary - you might even get away with a free consultation

i've tagged @mariefab as she has the better knowledge on employment related stuff

Edit: forgot to mention it also depends on the type of job she is doing, if that role require protection then the courts are more likely to uphold the clause

[reptile]

Re: Non Compete Clause

Thank you for your reply.

She is an account manager underneath an Account Director.

The company are the largest in the country at what they do.

[R0b]

Re: Non Compete Clause

Well, there is a good chance that the clause will be valid if she has access to clients on a regular basis or manages their account, they would also need to take into account the % of clients she maintains.

The only other option would be for her to get permission from someone with authority e.g. the account director agreeing not to exercise their right to bring a claim for breach of non compete clause.

has she already handed in her notice? She may wish to reconsider if she has as I think given her role there is a good chance the clause might be held reasonable.

[charitynjw]

Re: Non Compete Clause

I've read that, if it's a 'one size fits all' generic clause, it's less likely to be enforceable.
[MENTION=71570]R0b[/MENTION]

[reptile]

Re: Non Compete Clause

She manages one client only.

If she were to leave and manage a different client for 12 months would that change the validity of the clause?

She has not handed in her notice yet.

Thank you

Reptile

[R0b]

Re: Non Compete Clause

I've read that, if it's a 'one size fits all' generic clause, it's less likely to be enforceable.
@R0b

Yeah, the one size fits all being that the clause applies to everyone, hence people in more junior roles will not apply. Equally it can't apply as a restriction on every company, usually companies competing in the same sector as their employer.

Its not just about managing the clients, its also about the confidential information she may be aware or as the clause says trade secrets etc. If she were to compete for another company whats to say she wont share that information either accidentally or deliberately and it is that reason why employers have non-compete clauses to protect that interest.

Given the above, I'm not sure managing another client will affect the validity of the clause but it may be possible. The judge will take everything into account when deciding whether or not it would be upheld.
For example, if she manages 1 client and the business has many other clients then it is possible it may not be enforced together with the fact she will be managing another client at the competing company, providing that client is not a client of her employer.

A recent case you may wish to look at is Bartholomews Agri Food v Thornton 2016 - 6 month non compete but held to be unenforceable on a number of factors such as junior employee, the employee's customer base account for 1% of the company's annual turnover, drafted wider than necessary to protect the interest.

Your wife should really seek legal advice as this is getting into the details now. If your wife can get written waiver, (oral consent difficult to prove) then she should be fine otherwise she could potentially have difficulties

another case is Computer Associates plc v Sean Leaner 2001 - Account manager for 37 largest accounts in europe, restriction to actual and prospective customers. It was deemed too wide and would be enforceable if restricted to accounts employee had dealings with.

[Openlaw15]

Re: Non Compete Clause

Hello,

My Wife has a non compete clause in her contract.

She is not allowed to work for a competing company for a period of 12 months after handing in her notice.

She is not earning huge money and is the only wage earner in our household.

She has been offered another job working for competing company.

Can anybody please tell me how enforceable this is likely to be? Surely a Judge is not going to stop her from earning a living in the only industry that she knows? We could not afford for her not to work for three months let alone 12.

What is our best course of action here please?

I have attached the terms that are in her contract.

I am willing to pay for advice if necessary.

Thank you in advance,

Reptile

On her facts, it is a 'restraint on trade,' that is on her trade or, putting it another way restricting her ability to receive an income, her only income. In general at employment common law it is unreasonable and unfair to stop a person being employed by 'retraining their trade'. The effect of unemployment impedes the economy wherein the state is burdened, so it is likely absurd never mind unreasonable to enforce a 'restraint' on her ability to be employed, wherein she could lose her home owing to not being able to pay her mortgage.

There are exceptions but they must be reasonable, so in my view any non compete clauses are generally not enforceable and certainly not in your wife's position, notwithstanding in a democracy wherein the Human Rights Acts' Convention Articles are in effect it states there shall be no derisory treatment or discriminatory treatment. She is also a female so she benefits rights under the Equality Act 2010. So my overall view is said employment law renders the clause unenforceable, human rights likely do, and the Equality Act furthermore protects her as a protected characteristic.

[reptile]

Re: Non Compete Clause

Thank you very much for your input.

We will go and speak to someone to get "official" advice.

I will update the thread as soon as I have something to say so as to help other people in the future maybe?

Kind regards,

Reptile

[reptile]

Re: Non Compete Clause

Just to add some finality to the thread.

My Wife paid for legal advice who obviously got to see the contract in its entirety and could give full advice.

The advice was that the clause was way too broad and should the business try to gain an injunction she advised that she would have little difficulty in defending the claim as unenforceable.

Thank you for your help and input everyone!

Reptile

[Amethyst]

Re: Non Compete Clause

That's great news. Just for your interest the Gov are currently looking at legislating against non compete clauses - https://www.gov.uk/government/consul...l-for-evidence

Out of interest - how much did she have to pay for the advice ? ( just employment law is an area we are looking into encouraging firms to offer fixed fees )

[R0b]

Re: Non Compete Clause

Just to add some finality to the thread.

My Wife paid for legal advice who obviously got to see the contract in its entirety and could give full advice.

The advice was that the clause was way too broad and should the business try to gain an injunction she advised that she would have little difficulty in defending the claim as unenforceable.

Thank you for your help and input everyone!

Reptile

Well, interesting - did the lawyer specify any reason why it might be unenforceable? I took a quick look through and although 12 months may be considered too long, 6 months could be considered reasonable. Alternatively if Group Company falls outside of the sector that she is working in then that could be another reason for it being made unenforceable and being "too wide".

Always good to pay for advice, even if it was initial advice - just make sure to have it confirmed in writing what the advice was for reference.

[reptile]

Re: Non Compete Clause

Hi R0b,

The main point that she said was wholly unreasonable was the "restraint of trade".

Thank you

Reptile

[reptile]

Re: Non Compete Clause

Out of interest - how much did she have to pay for the advice ? ( just employment law is an area we are looking into encouraging firms to offer fixed fees )

That is interesting reading. I agree that there should be a period of time where the employee should not have access to anything that may compromise the employers interests but I am of the opinion that it is the employer that is gaining an advantage (or not receiving a disadvantage) and therefore should pay for it in the guise of "Gardening Leave".

She paid £250 for an hours consultation and written confirmation of advice.

Thanks!

Reptile

[Amethyst]

Re: Non Compete Clause

Just for ref as I have just read the actual contract - the section that spells out the blue pencil test, while it is correct, it does not mean that if a court finds the 12 months to be too long they can change it to six months - they can only remove bits from the clause, and if it still makes sense, enforce it - but they can't amend the clause ( so can't change 12 to something more reasonable - the whole clause fails if the 12 months is deemed unreasonable) eg. They could remove the words 'Island of' from the England/Wales/Island of Ireland so it makes sense. As most of the clauses are based on the 12 months - that's what you have to concentrate on to defend if they try anything later on, and whether 12 months can be deemed reasonable really depends on what the industry is.

Also trade secrets - piffle - that applies to anyone anyway.