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Post employment covenant

dacons
Posts: 4 Newbie
So im currently in a dilema I am currently working for a property maintenance company im still on probabtion but i hate it so I have found another job happy days accept now a client of my current employer has said there is a position coming up with them to replace a production line engineer (different role to my current) and they want me to apply (role is there regardless of me applying) ,
the problem is in my contract im not supposed to do business with any clients for 12 months the other problem aswell is until the position becomes available in JAN they want me to come in as a self employed temp.
now im getting mixed reviews on this I approached a solicitor online who said il be fine as im not acting in direct competition but I also spoke to my union rep and he said I would.
so here are the sections relevent to my issue so if anyone has any input id greatly appreciate it
Restricted Customer"
any firm, company or person who, during the 12 months before Termination, was (a) a client or prospective client of the Company for whom you carried out any work or (b) in the habit of dealing with the Company or referring work or clients to the Company and in both (a) and (b) above, with whom You had contact or about whom You became aware or informed, in the course of your employment.
anyone employed by the Company or any other Group Company at the level of director; area manager; account manager; project manager; project engineer; service manager; office supervisor and site supervisor or above and with whom You dealt with in the 12 months before Termination in the course of your employment.
Post-Termination Restrictions
21.1 It is recognised that as a Services Engineer within the Company, you will have access to:
21.1.1 clients and referrers of clients;
21.1.2 confidential and potentially commercially sensitive information relating to those
clients and referrers;
21.1.3 suppliers and contractors who the Company work with;
21.1.4 financial plans, proposals and details of income or financial performance relating
to the Company, and
21.1.5 general documentation and other extraneous and/or sensitive and/or confidential
information.
21.2 Such information is regarded as the property of the Company and it is recognised by You
that the Company are entitled to protect that property.
21.3 It is recognised that you will be expected to work professionally with and for clients and
referrers of clients, therefore will build professional relationships with those individuals. It is recognised that you will be expected to work within a team and will build professional relationships with your colleagues. It is recognised that the Company are entitled to
protect those relationships with clients, referrers of clients and colleagues.
21.4 In order to protect the Confidential Information, trade secrets, clients and other business
connections of the Company to which You have access as a result of the Appointment, You covenant with the Company that You shall not:
21.4.1 for 12 months after Termination solicit or endeavour to entice away from the
Company the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business; or
21.4.2 for 12 months after Termination in the course of any business concern which is in competition with any Restricted Business, offer to employ or engage or otherwise endeavour to entice away from the Company, or otherwise facilitate the employment or engagement of any Restricted Person, regardless of whether or not such person would be in breach of contract as a result of such employment or engagement; or
21.4.3 for 12 months after Termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business: or
21.4.4 at any time after Termination, represent yourself as connected with the Company in any Capacity, other than as a former employee, or use any registered business names or trading names associated with the Company.
21.5 If, at any time during your employment, two or more Restricted Persons have left their
employment, appointment or engagement with the Company to perform Restricted Business for a business concern which is, or intends to be, in competition with any Restricted Business, You will not at any time during the six months following the last date on which any of those Restricted Persons were employed or engaged by the Company, be employed or engaged in any way with that business concern under which You will perform Restricted Business on the behalf of that business concern.
21.6 None of the restrictions in clause 21.3 shall prevent You from holding an investment by
way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognised stock exchange; or
21.7 The restrictions imposed on You by this clause 21 applies to You acting:
21.7.1 directly or indirectly; and
21.7.2 on your own behalf or on behalf of, or in conjunction with, any firm, company or person.
21.8 The periods for which the restrictions in clause 21.3 apply shall be reduced by any period
that You spend on Garden Leave immediately before Termination.
21.9 If You receive an offer to be involved in a business concern in any Capacity during the
Appointment, or before the expiry of the last of the covenants in this clause 21, You shall give the person making the offer a copy of this clause 21 and shall tell the Company the identity of that person as soon as possible after accepting the offer.
21.10 You have entered into the restrictions in this clause 21 having been advised to seek
separate legal advice.
21.11 Each of the restrictions in this clause 21 is intended to be separate and severable, If any of
the restrictions shall be held to be void but would be valid if part of their wording were deleted, such restriction shall apply with such deletion as may be necessary to make it valid or effective.
21.12 If any court or arbiter determines that the periods for which the restrictions in clause 21.3
apply are excessive or go beyond what is regarded as reasonable and necessary to protect the legitimate business interests of the Company, and such a finding is not challenged or overturned upon appeal, then you acknowledge and agreed that the period of 12 months shall be held to be deleted from this clause and that there should be held to be substituted therefore the period of 6 months
the problem is in my contract im not supposed to do business with any clients for 12 months the other problem aswell is until the position becomes available in JAN they want me to come in as a self employed temp.
now im getting mixed reviews on this I approached a solicitor online who said il be fine as im not acting in direct competition but I also spoke to my union rep and he said I would.
so here are the sections relevent to my issue so if anyone has any input id greatly appreciate it
Restricted Customer"
any firm, company or person who, during the 12 months before Termination, was (a) a client or prospective client of the Company for whom you carried out any work or (b) in the habit of dealing with the Company or referring work or clients to the Company and in both (a) and (b) above, with whom You had contact or about whom You became aware or informed, in the course of your employment.
anyone employed by the Company or any other Group Company at the level of director; area manager; account manager; project manager; project engineer; service manager; office supervisor and site supervisor or above and with whom You dealt with in the 12 months before Termination in the course of your employment.
Post-Termination Restrictions
21.1 It is recognised that as a Services Engineer within the Company, you will have access to:
21.1.1 clients and referrers of clients;
21.1.2 confidential and potentially commercially sensitive information relating to those
clients and referrers;
21.1.3 suppliers and contractors who the Company work with;
21.1.4 financial plans, proposals and details of income or financial performance relating
to the Company, and
21.1.5 general documentation and other extraneous and/or sensitive and/or confidential
information.
21.2 Such information is regarded as the property of the Company and it is recognised by You
that the Company are entitled to protect that property.
21.3 It is recognised that you will be expected to work professionally with and for clients and
referrers of clients, therefore will build professional relationships with those individuals. It is recognised that you will be expected to work within a team and will build professional relationships with your colleagues. It is recognised that the Company are entitled to
protect those relationships with clients, referrers of clients and colleagues.
21.4 In order to protect the Confidential Information, trade secrets, clients and other business
connections of the Company to which You have access as a result of the Appointment, You covenant with the Company that You shall not:
21.4.1 for 12 months after Termination solicit or endeavour to entice away from the
Company the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business; or
21.4.2 for 12 months after Termination in the course of any business concern which is in competition with any Restricted Business, offer to employ or engage or otherwise endeavour to entice away from the Company, or otherwise facilitate the employment or engagement of any Restricted Person, regardless of whether or not such person would be in breach of contract as a result of such employment or engagement; or
21.4.3 for 12 months after Termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business: or
21.4.4 at any time after Termination, represent yourself as connected with the Company in any Capacity, other than as a former employee, or use any registered business names or trading names associated with the Company.
21.5 If, at any time during your employment, two or more Restricted Persons have left their
employment, appointment or engagement with the Company to perform Restricted Business for a business concern which is, or intends to be, in competition with any Restricted Business, You will not at any time during the six months following the last date on which any of those Restricted Persons were employed or engaged by the Company, be employed or engaged in any way with that business concern under which You will perform Restricted Business on the behalf of that business concern.
21.6 None of the restrictions in clause 21.3 shall prevent You from holding an investment by
way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognised stock exchange; or
21.7 The restrictions imposed on You by this clause 21 applies to You acting:
21.7.1 directly or indirectly; and
21.7.2 on your own behalf or on behalf of, or in conjunction with, any firm, company or person.
21.8 The periods for which the restrictions in clause 21.3 apply shall be reduced by any period
that You spend on Garden Leave immediately before Termination.
21.9 If You receive an offer to be involved in a business concern in any Capacity during the
Appointment, or before the expiry of the last of the covenants in this clause 21, You shall give the person making the offer a copy of this clause 21 and shall tell the Company the identity of that person as soon as possible after accepting the offer.
21.10 You have entered into the restrictions in this clause 21 having been advised to seek
separate legal advice.
21.11 Each of the restrictions in this clause 21 is intended to be separate and severable, If any of
the restrictions shall be held to be void but would be valid if part of their wording were deleted, such restriction shall apply with such deletion as may be necessary to make it valid or effective.
21.12 If any court or arbiter determines that the periods for which the restrictions in clause 21.3
apply are excessive or go beyond what is regarded as reasonable and necessary to protect the legitimate business interests of the Company, and such a finding is not challenged or overturned upon appeal, then you acknowledge and agreed that the period of 12 months shall be held to be deleted from this clause and that there should be held to be substituted therefore the period of 6 months
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Comments
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That is a really good clause. And believe me, most aren't. The timescale bothers me, as I think both 12 and 6 months are perhaps too long, but I don't know what you do - and in the final analysis, only a court can decide what is enforceable and what isn't. But I would be concerned about the solicitirs advice - to simply say it is unenforceable is a bit too confident a statement.
I'm also concerned about the potential new employer. There is or isn't a job. Self employment isn't a good option for you, as there is no guarantee that will ever change, so you'd have no employee rights. I'm also struggling to see how a job of this kind could genuinely be self employment - you won't be able to turn up when you want to, or send a substitute, so it seems to be a fake. Which may make you wonder whether it is out of the frying pan and into the fire.
In the end, as I said, nobody but a court will be able to decide, and that depends on whether the employer is willing to take it that far. Most won't. But some will, and given how carefully that clause is drafted, I wouldn't bet they won't.0 -
The self-employed role would worry me too. If the OP was going straight across as an employee of the new company, they would presumably support him if the current employer tried to take action over the restriction. As a self-employed person he would be entirely on his own if action was taken.
I may be wrong, but by working in this way it seems that the potential new employer is distancing themselves from any legal action.0 -
I largely agree with the last two comments although I am less convinced that employee / self employed aspect is all that significant.
Realistically being an employee on a standard contract of employment is of little benefit during the first two years. In fact it could be argued that working on a self employed basis gives the OP the opportunity to agree a contract for services that actually provides more protection. Obviously that comes down how desirable their services are to the new company.
From a tax point of view it is very much down to the "employer" to get this right. It is them that HMRC will come after if it is judged to be wrong. Providing the OP properly declares their earnings and pays self employed NI they are fairly well covered.0 -
Hello, it sounds like clause 21.4.3 is the provision which is most relevant to your situation.
The concept of a "Restricted Business" is key to this clause. Can you tell us what that definition is?
When dealing with contract clauses like this, the key thing is just to read them very carefully and also read the definitions, to see if you are caught by what the contract says. I would only rely on advice from people who have actually read this part of your contract properly because every contract is a bit different.0 -
Ok thanks for the replys and...
the self employment think is a way that I can be pulled in now as the number crunchs have said no extra heads until the new year but they will pay an outsider until this point so I trust to this point they wont do anything funny there not that sort of company which is one of the reasons i want to come on board.
As for Restricted buisness it states "those parts of the buisness of the company with which you were involved to a material extent in the 12 months before termination".
now can this be interpreted as if I dont do the same job im ok.
Basically im a facility maintenance engineer specifically an electrician doing things like lighting checks , HVAC checks which is heating , ventilation and aircon also various other jobs to do with a property but the job ive been offered is working on the clients production line equipment which id be trained on and would never had any dealings with in my current position.0 -
It's very simple. If the employer wants to pursue it, it's up to the courts to decide. There is absolutely nobody else who can give you an answer. There is no doubt at all that you would be breaching the terms. "(a) a client or prospective client of the Company for whom you carried out any work". So the same work isn't what it says. I tend to think it is unreasonable, but I don't know that for a fact, and only a court can decide. So it does depend on whether the employer is likely to go there.0
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As for Restricted buisness it states "those parts of the buisness of the company with which you were involved to a material extent in the 12 months before termination".
So rather than guessing what the clause says, let's have a careful read of the clause and follow it through.
The clause starts off with a few definitions as to what is meant by certain terms, and then sets out what the restrictions are.
You should read the whole thing carefully, but the only bit which looks relevant to me is clause 21.4.3. This says you may not "for 12 months after Termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business."
Going through the clause, you meet the definition of "Restricted Customer" because you say the new employer is a client of your old employer.
And if you took the new job you would clearly be providing services to the new employer.
The question is then whether your new job would be "in the course of any business concern which is in competition with any Restricted Business".
The definition of "Restricted Business" is the parts of the business you were involved with in the last 12 months. This is basically your current job.
So what this boils down to is whether or not your new role as a production line engineer would be competing with your old job in property maintenance?
If you are moving to a completely new role, then the new role and the old role won't compete, and is therefore not covered by the clause, so if that's the case I don't think you have anything to worry about.0 -
There is no doubt at all that you would be breaching the terms. "(a) a client or prospective client of the Company for whom you carried out any work". So the same work isn't what it says. I tend to think it is unreasonable, but I don't know that for a fact, and only a court can decide. So it does depend on whether the employer is likely to go there.
The actual restrictions appear further down!0 -
steampowered wrote: »This is only a definition of what is meant in the contract when it refers to the defined term "Restricted Business".
The actual restrictions appear further down!0 -
There is also only one definition of ANY work!
The clause you posted simply defines what is meant in the contract when the contract uses the term "Restricted Customer", it doesn't prohibit the Op from doing anything!
You have to look at the rest of the clause for the actual prohibitions. I agree the Op's new employer is a "Restricted Customer", so you have to look at the restrictions around Restricted Customers in clause 21.4.1 and 21.4.3.Unless you are a court of law, you cannot assert with impunity that this clause is unenforceable. And neither can I.
When faced with a contract, a court of law will read the contract to work out what it means.
We can get a very good indication of what a court would decide by reading the contract.
For example, if we had a contract which said "You must deliver 100 apples", we could say with a very high level of certainty that any judge would not allow the delivery of 100 oranges to satisfy that contract.
The same principle applies here - the only difference is that the clause is long and complicated. However I think it is still perfectly possible to read through the clause to see exactly what it restricts and what it doesn't restrict. The clause is long and complicated but it isn't ambiguous.0
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