Restrictive Covenant

shocky_2

I've litigated two cases involving RCs. With the caveat that we only have fairly limited information, I would think that this clause is enforceable. RCs are unenforceable if they go beyond what is reasonably necessary to protect the employer's interest. This particular clause is limited to your employer's existing clients so I think it will probably fall on the enforceable side of the line. It would be unenforceable if it actually stopped you from working, e.g. if it said "you cannot work for any competitor for 6 months", but this is not what it says.

What I dont really get is what they could sue me for? The customer has gone... what are company A actually losing?

It depends what they sue you for. The clause has two parts: the bit about not soliciting clients away from your former employer and the bit about not accepting orders from them.

If Company A convinced a court that you convinced the client to move away, then he would get damages representing his loss of profit from that client. This could be very substantial.

Damages for breaching the "not accepting orders" part would be lower. Even if your actions do breach this part of the clause (this depends on the precise wording), if you can prove that the client had already moved then your actions would not have caused Company A any loss. Company B could potentially apply for an injunction preventing you from working on the account but such injunctions are difficult to get and it wouldn't get Company A any money.

There is always a risk that Company A will sue. I think the risk that you are accused of breaching the "accepting orders" part is management, but the risk of being accused of causing the client to move are much greater.

Based on what you've posted, I think moving to Company B is a risk worth taking as long as you take practical steps to protect yourself from future claims. I suggest that you do two things. First, get a document which proves that the client decided to move to Company B before you resigned. Second, try to get a document which proves why the client moved, to prove that their move had nothing to do with you. This will reduce the risks of a claim that you breached your employment contract by inducing the client to move while you were still employed with Company A.

mountainofdebt

youngsolicitor wrote: »

I've litigated two cases involving RCs. With the caveat that we only have fairly limited information, I would think that this clause is enforceable. RCs are unenforceable if they go beyond what is reasonably necessary to protect the employer's interest. This particular clause is limited to your employer's existing clients so I think it will probably fall on the enforceable side of the line. It would be unenforceable if it actually stopped you from working, e.g. if it said "you cannot work for any competitor for 6 months", but this is not what it says.



It depends what they sue you for. The clause has two parts: the bit about not soliciting clients away from your former employer and the bit about not accepting orders from them.

If Company A convinced a court that you convinced the client to move away, then he would get damages representing his loss of profit from that client. This could be very substantial.

Damages for breaching the "not accepting orders" part would be lower. Even if your actions do breach this part of the clause (this depends on the precise wording), if you can prove that the client had already moved then your actions would not have caused Company A any loss. Company B could potentially apply for an injunction preventing you from working on the account but such injunctions are difficult to get and it wouldn't get Company A any money.

There is always a risk that Company A will sue. I think the risk that you are accused of breaching the "accepting orders" part is management, but the risk of being accused of causing the client to move are much greater.

Based on what you've posted, I think moving to Company B is a risk worth taking as long as you take practical steps to protect yourself from future claims. I suggest that you do two things. First, get a document which proves that the client decided to move to Company B before you resigned. Second, try to get a document which proves why the client moved, to prove that their move had nothing to do with you. This will reduce the risks of a claim that you breached your employment contract by inducing the client to move while you were still employed with Company A.

Whilst I've had no legal training I think your answer is soley based around Company B.

As I interpreted it, the cause relates to any Client of Company A ....so if Company C decided to move to Company B as well then it would be down to the OP to prove that she had no hand in their move and whilst she might be totally innocent, its her that would have the stress in the meantime.

SarEl

mountainofdebt wrote: »

Whilst I've had no legal training I think your answer is soley based around Company B.

As I interpreted it, the cause relates to any Client of Company A ....so if Company C decided to move to Company B as well then it would be down to the OP to prove that she had no hand in their move and whilst she might be totally innocent, its her that would have the stress in the meantime.

In terms of a restrictive covenant, the former employer would have to have grounds to claim a breach, so the OP wouldn't have to prove anything about the clients move - but that is a long way from being the end of the story as to whether the former employer could find grounds - it only takes a small slip. The OP will need to spend 6 months being very careful indeed.

However, there is more than one way to skin a cat... Here's one that somone made earlier!

Client D mentions to Company A that they were talking to OP about their new job at Company B and were impressed by the brochure they picked up. Company A immediately instruct solicitors to issue proceedings against OP and Company B - in the latter case for inducement to breach of contract. Company B decides that the best way to deal with the litigation is to sack OP (two years now for employment protection!). OP has no job - and loses the case. Result? A huge bill and no employment. And that is a true story. The person in that case also thought that restrictive covenants were not enforceable... Although the inducement to breach was a very dicey claim, it worked well enough for the former employer as no more than a threat.

shocky_2

mountainofdebt wrote: »

Whilst I've had no legal training I think your answer is soley based around Company B.

As I interpreted it, the cause relates to any Client of Company A ....so if Company C decided to move to Company B as well then it would be down to the OP to prove that she had no hand in their move and whilst she might be totally innocent, its her that would have the stress in the meantime.

Yes, this is a good point. If the Op worked for other clients who also move to Company B then there is a potential claim there too if the employer can show that the jump was due to the Op's breach of contract.

Mgreen17_2

hello, not sure if anyone will read this but anyway....

My old employer gave up, conceding that my restriction was to wide and therefore unenforceable.

My solicitor said that if they had included the word "deal" in there. Ie i cannot "deal" with my existing client base then they could have got me.

However, they didn't, so happy days.

Justicia

Thanks for updating

ohreally

With hindsight, perhaps there is no such restriction in your current contract.