non compete clause

[barons]

Hi,
I would be grateful to receive some advice on a non compete and non solicitation clause in my contract. I may be considering setting up my own business or becoming a partner in another business, but am concerned that the non compete will prevent me doing either.

I joined my employer three years ago and since then have been promoted from manager level to director level (no new contract was signed, although job title changed as did salary). As the non compete is very broad I am wondering if it is enforceable. I work in public relations and do understand that client relationships are key and I have built some excellent ones who would probably wish to come with me. I understand this wouldn't be fair to the existing employer so wouldn't solicit existing clients, but really wanted to understand if I could be prevented working in the same industry for myself or for someone else as I feel this is restricting me ever moving on in either capacity.

My other question is could I set up in a different discipline, i.e. a marketing function rather than public relations? As the potential partnership would be with a marketing company, not in a close proximity to the existing employer, I could join the marketing arm, wait for the restrictive covenant to lapse and then look at expanding to public relations?

Another question I have is what happens if my clients choose to leave the employer from their own accord?


On another note my surname is spelled incorrectly on the contract and the Company now trades under a different name although the registered name is still the same.

Here are the clauses:

Non-Competing: During your employment and for a period of 24 months after leaving the Company, you must not be employed or engaged in any business which is in competition with the business conducted by the Company and with which you were concerned and had material dealings with during your employment with the Company within the last 12 months prior to the date your employment ended.

Non-Solicitation: During your employment and for a period of 24 months after leaving the Company you must not attempt to solicit custom from any private individual or company whom you dealt with as a client during the 12 months preceding your leaving the Company. Nor must you approach any employee of the Company, with a view to him/her leaving the Company’s employment.

I would greatly appreciate any advice on this matter,

Thankyou

[R0b]

Re: non compete clause

Given the length of time you have been at the company, 24 months seems to be excessively long. How long have you been promoted to a Director?

A non-competition clause which is enforceable must be reasonable so as to protect the legitimate interests of the business e.g. connections, confidential information, workforce etc. Even where it could be held reasonable, the business needs to show that its interest cannot be protected adequately by another restriction such as non-dealing or non-solicitation.

It would be reasonable for the business to prevent you from working with another company that is in direct competition with it (which the clause states) but I would probably say given the length of time you have worked for the business, 12 months would have been more appropriate. Had you been a director from the start of your employment, it would have been an arguable point that 2 years might have been reasonable. A lot of case law you tend to see a restriction of 12 months and there has only been a handful that I have seen which is longer than this and in extreme circumstances as long as 3 years. Each case will depend on the facts and what the business is trying to protect. It goes back to the point of whether or not a less onerous restriction clause could be used instead.

As for setting up a business in another industry, such as marketing, I believe that would be possible to do as that the purpose of the clause would be to restrict you from being employed with any PR business. To extend this to other industries the PR business is not involved in would be deemed too wide and unreasonable.

Regarding customers, you are entitled to tell your customers you are leaving the business but that is as far as you should go as if you go any further you could be deemed to be soliciting. You should keep it in writing as you will have a paper trail of what exactly was said in the event of a dispute. If they leave off their own accord that is fine as long as you have not induced them to leave the business and come to you. It will be up to the PR business to show that you solicited them away.

Not an expert in this area and this is from rough memory. @mariefab is the one who usually gives good advice on employment related contracts and I am sure she can correct me if I am wrong on anything.