Employee restraint clause in contract

coolshades

hi,

i work in a company which has 90% of its business in one particular domain and 10% in another domain. i intend to join another company which is a competitor to my company in the 10% domain and have been conducting negotiations with them.

i have just noticed that my employment contract has a restraint clause that says

" the employee shall not during the duration of the employment contract or for a period of 6 months from the termination date carry on alone or in partnership or as an agent of any other person any business competitive with or similar to the company's business"

does this mean i cannot seek gainful employment with the company i am negotiating with? they compete with my current employer, though my employer has only 10% of its business from that domain.

the work i will be doing is standard, quite generic work in that domain.

i dont think this clause restrains me from employment, however will appreciate views.

Blankie

Hi there
Its a difficult one to answer because restraint clauses have caused no end of problems in Tribunals over the years (just google the term and you'll see). I think the term you used in your post is key - your current employer cannot stop you seeking gainful employment elsewhere - and the 10% issue will also be in your favor.
You would really be best taking advice from ACAS who can advise you about your specific case. Sometimes it depends how senior you are and how long youve been at your current company (ie how many contacts you have built up over your time there).
Hope this helps a bit.

eamon

That type of contract term is usually only applied to the top dogs. You should do more google type research on this subject. Me personally I would be thinking along these lines "How secure is the business activity of present employer? Are they at risk of going belly up? If they do go under how much money will I get?" Lastly many of these terms are considered to be restraint of trade and hence illegal under EU law (an employment lawyer could clarify this).

cazziebo

This is a restrictive covenant - not a restraint in trade - and is legal and enforceable.

However, many employers will not pursue further than a couple of lawyers' letters, because of the cost and time involved. Depending on the business, some will.

It's not just "top dogs", these are common clauses where someone could take specialist knowledge, customers, competitive information to a company that could use it to damage the original employer's business. Recruitment consultants, hairdressers, salespeople, food technologists, chemical engineers, trainers - many people will have a restrictive covenant as standard.

OP, it would only be fair to let your new employer know you have a restrictive covenant. They may decide to take the risk, or assign you to a different role for the six months.