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Restrictive Covenant / Non-Solicitation

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  • Restrictive Covenant / Non-Solicitation

    Hi,

    Looking for some advice please.

    I work in Recruitment for an agency as a Principal Consultant & Sales Director (25% share). My fellow director & MD (75%) is beginning to make my life difficult with a multitude of issues, but the main being micromanagement and becoming quite aggressive physically - not with me personally, but shouting, swearing and throwing items furniture around a meeting room because certain things aren't being done in "his way".

    I'm therefore looking to leave the business after 3 years with them, I would however like to remain in Recruitment and I know a lot of the clients we support would follow me.

    Problem is, I have a couple of clauses in my contract.

    1) A section states that I am not allowed to set up or work for a similar business for 6 months.

    2) I'm not to entice or approach any clients also which I totally understand.

    My question is, surely I should be allowed to set up my own business, otherwise my current employer could be deemed to be saying I'm not allowed an income?

    Secondly, what happens if a client I've worked with In the past takes it upon themselves to approach me, when I haven't enticed or made any approaches toward them?

    The clauses are below:

    Restrictive Covenants

    You agree with the Company that you will not directly or indirectly, whether alone or in conjunction with or on behalf of any other person or organisation and regardless as to the capacity of your involvement:

    1) Set up a business, or work for a business in any capacity, in direct competition with the Company for a period of 6 months from the date of termination of your employment.

    2) Within a period of 6 months from the date of termination be engaged, concerned or interested in any business which at any time during the twelve months preceding the termination of your employment has supplied products or services to the Company or is or was at any time during the above period a client (defined as any person, firm, business or organisation to whom or to which the Company has within the above period supplied products or services and with whom you had personal dealings during this time) if such an engagement, concern or interest causes or may cause the supplier or client to either cease or materially reduce its supplies or orders and contracts to the Company.

    3) For a period of 6 months from the termination date, for the purpose of directly or indirectly competing with the Company (whether as principal, agent, employee, director, partner or otherwise), canvass, solicit, entice or otherwise approach any client (defined as any person, firm, business or organisation to whom or to which the Company has within a period of 6 months preceding the date of termination, supplied products or services or was at any time during this period a client with whom you had personal dealings) for the sale or supply of products or services or endeavour to do so.

    Any advice would be appreciated.

    Thanks
    Last edited by 90andyjw; 20th October 2023, 14:24:PM.
    Tags: None

  • #2
    Originally posted by 90andyjw View Post
    Problem is, I have a couple of clauses in my contract.

    1) A section states that I am not allowed to set up or work for a similar business for 12 months.
    6 months according Covenant 1)

    All opinions expressed are based on my personal experience. I am not a lawyer and do not hold any legal qualifications.

    Comment


    • #3
      All 3 clauses you have set out are enforceable for 6 months and they are pretty clear.

      The fist clause clearly states setting up a business that is in direct competition and the second one refers to clients that have been such for the last 12 months.

      I think you are going to need to be very careful about disregarding these covenants. Although my one comment is that it does not contain a geographical limitation, for which there may be an argument of being too wide.

      Also a question in respect of the fact you say you are a shareholder. Do you have a shareholders agreement in place and what does it state the impact would be of you leaving on your shareholding according to that agreement.



      If you would like a one-to-one expert consultation with me on your employment issue than I can be contacted by emailing admin@legalbeaglesgroup.com

      I do not provide advice by PM although I may on occasion ask you to send me documents this way but any related advice will be provided back on your thread.

      I do my best to provide good practical advice, however I do so without liability.
      If you have any doubts then do please seek professional legal advice.


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      Comment


      • #4
        Thanks for coming back to me. Apologies for the delay in response.

        I'm based 50 miles away from the office and also in a different county entirely. Recruitment is all I've known and loved for the last 6 years. By saying I'm not allowed to set up my own business, coupled with the geography aspect, the restriction would then mean I wouldn't be allowed to trade.

        On this basis, is that enforceable?

        As for the shareholding agreement, I do have one but there's nothing in there relating to any restrictions, just if I did resign I would naturally hand the shares back.

        Comment


        • #5
          ULA apologies forgot to tag you above!

          Comment


          • #6
            The shareholders agreement sound fairly straight forward which is good.


            Sorry to be blunt it does not make any difference if "Recruitment is all I've known and loved for the last 6 years." It is about the enforceability of the terms you agreed to. Six months is fairly standard and would be considered enforceable given seniority by way of your job title and the fact you have a shareholding. What is arguably unenforceable is the fact that there is no geographical limit from what you have set out in your posts however again this would fall away after a six month period.

            How much notice to you have to give?

            If you would like a one-to-one expert consultation with me on your employment issue than I can be contacted by emailing admin@legalbeaglesgroup.com

            I do not provide advice by PM although I may on occasion ask you to send me documents this way but any related advice will be provided back on your thread.

            I do my best to provide good practical advice, however I do so without liability.
            If you have any doubts then do please seek professional legal advice.


            You can’t always stop the waves but you can learn to surf.

            You are braver than you believe, smarter than you think and stronger than you seem.



            If we have helped you we'd appreciate it if you can leave a review on our Trust Pilot page

            Comment


            • #7
              I doubt that the lack of geographical restriction is going to make a difference, particularly in a type of business where nowadays you can work from anywhere.

              The restriction on approaching/dealing with clients will almost certainly be upheld.
              Lawyer (solicitor) - retired from practice, now supervising solicitor in a university law clinic. I do not advise by private message.

              Litigants in Person should download and read the Judiciary's handbook for litigants in person: https://www.judiciary.uk/wp-content/..._in_Person.pdf

              Comment

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