'Non Compete Clause'

AndyWhyteUK

Hi all,

Hope everyone is well.

I have been offered a new position by a company which I've accepted. I today handed in my 1 months notice and was told that I have a 'non compete clause' in my contract.

Now whilst the two companies don't directly compete they are both software companies in the same industry.

If there is any clause I certainly wasn't made aware of it.

My question is how enforceable is this clause? I work for a company that is renowned to be pretty poor when it comes to letting people get away with things in terms of people that have ripped them off before who've not even been followed up.

The bottom line is that I feel I was forced out anyway. I wasn't given the correct tools to do my job (by the admittance of my management) and I was vastly underpaid.

Many thanks in advance all you super helpful peoples!

DVardysShadow

Ask them to provide evidence of the non-compete clause. Post back with what they come up with.

terra_ferma

It should be in your contract. Or in some companies they negotiate a compromise agreement where they give you money in exchange for not working for competitors as well as not taking them to employment tribunal for a number of reasons.

They can't make it impossible for you to find a job in your area of work.
And I've been told by a solicitor that they are difficult to enforce.

The_Pedant

If there is an agreement in place, then it should be in your contact of employment, or another agreement that you both signed.

As terra_ferma says, they are often difficult to enforce as any court will be looking for caluses that exert the minimum restraint necessary to protect the interest of the parties, whilst not breaching the public interest at large. Many such clauses though are often badly drawn up and are often simply seen as too much of a restraint of someone's ability to trade in their chosen career, and therefore unenforceable.

As DVardysShadow says, ask for evidence of such an agreement. If you agreed to such a clause, someone should be able to advise if the wording may possibly be enforceable.

AndyWhyteUK

Thanks guys.
Great advice. I will seek out my employment contract details today and report back.

I haven't explained to the company I just resigned from that I am going to a competitor. But I think they know. Ironically I just brought the two companies together to help each other trade. So you can imagine I find it a little silly that they are throwing this non compete stuff up in the air.

That said last night I was locked out of the company network, and thus lost access to emails, my files etc, so I guess today will be an interesting day.

I aim just to take the moral high ground and try and keep everything good natured and on good terms. If they don't want that then there isn't much I can do

DVardysShadow

The_Pedant wrote: »

....
As DVardysShadow says, ask for evidence of such an agreement. If you agreed to such a clause, someone should be able to advise if the wording may possibly be enforceable.

It is not just the wording which is important, it is the source for the clause. So if you joined the company in March 2005, say and they point to the Employee handbook dated May 2005, but they can't produce anything earlier than this, then it becomes a retrospective clause and at least arguable.

terra_ferma

DVardysShadow wrote: »

It is not just the wording which is important, it is the source for the clause. So if you joined the company in March 2005, say and they point to the Employee handbook dated May 2005, but they can't produce anything earlier than this, then it becomes a retrospective clause and at least arguable.

I expect this clause to be valid should be in a signed document, like a contract or annex/amendment/letter to it, rather than just the handbook?

AndyWhyteUK

Hi All.

They sent me home today claiming I didn't need to work my notice. My exit letter has this on it:

Please be aware that under common law and statutory rights we have an obligation to protect our proprietary and confidential information, therefore this includes you working for a competitor or any employee in th eindustry that sells a product that in any way competes with the products *company name* has in our portfolio.

It was written by the CEO's PA who is the most pretentious person I've ever met. It sounds like they don't have much to go with to me..

Thoughts?

terra_ferma

AndyWhyteUK wrote: »

Hi All.

They sent me home today claiming I didn't need to work my notice. My exit letter has this on it:

Please be aware that under common law and statutory rights we have an obligation to protect our proprietary and confidential information, therefore this includes you working for a competitor or any employee in th eindustry that sells a product that in any way competes with the products *company name* has in our portfolio.

It was written by the CEO's PA who is the most pretentious person I've ever met. It sounds like they don't have much to go with to me..

Thoughts?

Normally companies pay to enforce such clauses, it's called a compromise agreement.
You could reply that you would be happy to negotiate such an agreement, so they realise that they will have to give you some compensation if they want you not to work for competitors (although it your case it may be too late, as you already have another job).

They also include confidentiality causes.
You can find info here: http://www.compromiseagreements.co.uk/terms.htm
Let's say that if the letter that they sent to you was enough, companies would not pay £££££ for it!

SueC_2

I've always been advised that restrictive clauses like this are nigh on impossible to implement. The company have the right to protect their intellectual property etc. They don't however have the right to take away your right to employment.

If your chosen career is as a software designer (or whatever), they can't tell you that you can no longer do that. They can however choose to pay you to stay at home for a suitable period of time to ensure that any knowledge you gained whilst employed by them is out of date by the time you join your next company. And THAT is what they call money for old rope (or software, as the case may be)!!!

cazziebo

The company has the right to protect its business, just as the employee has the right not to have their ability to earn their living unreasonably restricted.

Such clauses are very much enforceable. However, they are very expensive and time consuming to pursue, and it's only done when there is a significant threat to the business. So a recruitment consultant who goes to work with a competitor, takes the names, numbers etc of clients and candidates may well find the case being pursued. A software developer who takes what is effectively the IP of their former employer to another company operating in the same market may also find the covenant being enforced.

Now - what you have said here suggests that there is not an explicit contractual restriction on you. I think the employer would have a very difficult job relying on "common law and statutory rights" to pursue any case against you, unless you actively target harming their business.

(Can I also address two other points:

It is not normal to pay to enforce such clauses. The purpose of a compromise agreement is more about dispute resolution. Restrictive clauses may appear in a compromise agreement but are rarely the reason for it.

Staff handbook also forms part of any contract of employment so as long as this is issued to employees then it becomes part of the terms and conditions. Doesn't have to be signed for)