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Restrictive Covenant in Updated Terms and Conditions

Hi all

My employer has recently advised that I need to sign their updated terms and conditions.

There is a fairly major problem in this for me because essentially to only relevant change is a new restrictive covenant that effectively says -

For a period of 6 months I may not work for another company that does the same thing as my current employer anywhere in the UK. (Yes really).

My current employer is an IT company and it would be highly likely that if I needed to find another job, it would be with another IT company doing very much what I do now. They also have a national presence which means, the covenant applies throughout the UK.

My understanding is that such a broad covenant *probably* wouldn't be enforeceable. However, this is immaterial given that the mear threat of legal action would likely result in future job offers being pulled. As such, I feel it would be total madness to sign those T + Cs as written.

My question is, assuming I don't sign the T + Cs, what can the company then do? I'm not clear on whether they could either terminate my employment or make me redundant on the grounds of refusing the T + C change. They are a fairly large company so it seems unlikely that I could convince them to change the terms.

I'm sure it will be resolved amicably but I just want to understand what options are open to both parties

Thank you
«13

Comments

  • sangie595
    sangie595 Posts: 6,092 Forumite
    I agree it's probably unenforceable, assuming you aren't the CEO! But if you carry on working without signing it, you have agreed to the term. You don't need to sign to agree. You just need to carry on in their employment without disagreeing.

    So they do not need to dismiss. You will agree by default. If you object you must say that you are working under protest. And unfortunately you must then do something about it. You can't work under protest indefinitely. You would have to go to a tribunal.
  • sh856531
    sh856531 Posts: 444 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Hi Sangie,

    Thanks for your reply.

    I certainly wouldn't just carry on working without raising it with them. If it comes to it, I will refuse to sign it in writing and explain my reasons for doing so.

    My understanding is that the ultimate sanction they have is to terminate the existing contract and re-offer the position with the new terms. I would again refuse.

    My question at that point is, if they went the terminate + re-offer route and I still declined, would I be entitled to my x months notice salary and redundancy payments? Is being terminated due to being unwilling to sign a modified contract considered redundancy? This would probably focus employers mind a little bit as it would be a moderate sum of money.

    This all sounds far more severe than it actually is. I think it will all be resolved by a full and frank discussion with my bosses, but its best to be informed!

    Thanks again
  • Guest101
    Guest101 Posts: 15,764 Forumite
    Have you asked why they doing this?

    And what the penalty is?
  • sh856531
    sh856531 Posts: 444 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    Basically they're doing it because from time to time staff leave and go work for competitors. its as simple as that - they dont like losing talent to the competition.

    It's actually a very smart clause to put in from an employer perspective.

    1. It costs nothing
    2. Most employees don't read their contracts properly and so sign
    3. Those that do read the terms will still sign anyway for fear of being seen as obstinate regardless of how one sided the deal is

    The real genius of it however is, even though it would likely be legally unenforceable for all but the most senior management roles, it is entirely sufficient to *threaten* to sue over. This mere threat of legal action would be sufficient to have most future job offers rescinded by any future employer - and et viola - job done.
  • sangie595
    sangie595 Posts: 6,092 Forumite
    sh856531 wrote: »
    Hi Sangie,

    Thanks for your reply.

    I certainly wouldn't just carry on working without raising it with them. If it comes to it, I will refuse to sign it in writing and explain my reasons for doing so.

    My understanding is that the ultimate sanction they have is to terminate the existing contract and re-offer the position with the new terms. I would again refuse.

    My question at that point is, if they went the terminate + re-offer route and I still declined, would I be entitled to my x months notice salary and redundancy payments? Is being terminated due to being unwilling to sign a modified contract considered redundancy? This would probably focus employers mind a little bit as it would be a moderate sum of money.

    This all sounds far more severe than it actually is. I think it will all be resolved by a full and frank discussion with my bosses, but its best to be informed!

    Thanks again

    If they enforce the new conditions there is no notice pay and no redundancy pay. They would tell you that you must accept them by a certain date - that would be your notice. If you don't accept them, then that is your employment over and done. You would be entitled to claim unfair dismissal, but I'd have to say that I wouldn't like to call it on which way it would go.
  • Guest101
    Guest101 Posts: 15,764 Forumite
    sh856531 wrote: »
    Basically they're doing it because from time to time staff leave and go work for competitors. its as simple as that - they dont like losing talent to the competition.

    It's actually a very smart clause to put in from an employer perspective.

    1. It costs nothing
    2. Most employees don't read their contracts properly and so sign
    3. Those that do read the terms will still sign anyway for fear of being seen as obstinate regardless of how one sided the deal is

    The real genius of it however is, even though it would likely be legally unenforceable for all but the most senior management roles, it is entirely sufficient to *threaten* to sue over. This mere threat of legal action would be sufficient to have most future job offers rescinded by any future employer - and et viola - job done.
    It wouldn't effect future job offers
  • sh856531
    sh856531 Posts: 444 Forumite
    Part of the Furniture 100 Posts Name Dropper Combo Breaker
    > It wouldn't effect future job offers

    It absolutely can effect future job offers. I've seen it happen several times and it was at effectively zero cost to the former employer.

    Scenario:
    - Employee leaves as he has a job offer from a "competitor"
    - Former employer has a legally unenforceable restrictive covenant in place that the employee signed
    - Former employer sends a letter to both the former employee and prospective employer that threatens both an injunction on the job offer and legal action pursuant to the (still completely unenforceable) clause in the employees contract
    - Prospective employer goes - woah too much hassle and pull's the job offer. Plenty more fish in the sea and all that

    I have seen that happen to at least 3 people so have first hand experience of it.
  • sangie595
    sangie595 Posts: 6,092 Forumite
    Guest101 wrote: »
    It wouldn't effect future job offers
    I wouldn't discount the OP's knowledge of the employer. There actually are real cases of employers threatening to sue new employers for taking staff bound by restrictive covenants. And the OP is right - although the likelihood of it happening is slim, many employers back off, especially if the threat is from a big and powerful company. There are always less risky choices of employees.
  • sangie595
    sangie595 Posts: 6,092 Forumite
    sh856531 wrote: »
    > It wouldn't effect future job offers

    It absolutely can effect future job offers. I've seen it happen several times and it was at effectively zero cost to the former employer.

    Scenario:
    - Employee leaves as he has a job offer from a "competitor"
    - Former employer has a legally unenforceable restrictive covenant in place that the employee signed
    - Former employer sends a letter to both the former employee and prospective employer that threatens both an injunction on the job offer and legal action pursuant to the (still completely unenforceable) clause in the employees contract
    - Prospective employer goes - woah too much hassle and pull's the job offer. Plenty more fish in the sea and all that

    I have seen that happen to at least 3 people so have first hand experience of it.

    Cross posted - but yes, I have seen it happen. I have also seen people end up with no job having resigned before the threat is made, and then they are stuck with no job at all
  • Guest101
    Guest101 Posts: 15,764 Forumite
    sh856531 wrote: »
    > It wouldn't effect future job offers

    It absolutely can effect future job offers. I've seen it happen several times and it was at effectively zero cost to the former employer.

    Scenario:
    - Employee leaves as he has a job offer from a "competitor"
    - Former employer has a legally unenforceable restrictive covenant in place that the employee signed
    - Former employer sends a letter to both the former employee and prospective employer that threatens both an injunction on the job offer and legal action pursuant to the (still completely unenforceable) clause in the employees contract
    - Prospective employer goes - woah too much hassle and pull's the job offer. Plenty more fish in the sea and all that

    I have seen that happen to at least 3 people so have first hand experience of it.

    Sorry but why would you want to work for somewhere that fails to understand the very basics of contract law.

    Oh and how have you seen this happen to 3 people in a new term of employment?
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