Legal Issues with Contacting Old Customers

steampowered

I also confirm what sangie is telling you.

The fact that someone has stopped working for an employer does not necessarily mean that their employment contract has terminated. It is very common for employment contracts to contain provisions which apply after the end of employment.

The two most common examples are restrictive covenants (which typically say you can't compete with the employer or take their clients during your employment or for a limited period thereafter) and confidentiality clauses (which typically say you can't use the company's confidential information after you have stopped working for them).

You can verify this for yourself by googling for 'restrictive covenants'. There is a detailed body of law surrounding which looks at how long these can apply for after the end of someone's employment. There are literally hundreds of reported cases we could cite which concern a situation in which post-employment covenants contained in an employment contract have been enforced by a court.

steampowered

MEM62 wrote: »

This is a sensitive issue in my industry and I have dealt with these specific issues on a number of occasions. Turn up at court with a contract of employment to deal with any post-employment matters and the judge will not even take a look at it as it is not longer in force. It will only be considered in relation to events that occurred during the period of employment.

Here is a blog from a barristers' chambers which summarises 10 cases on restrictive covenants which were heard by the courts during 2015-2016. You will see that the covenants were enforced in most of the cases.

http://www.pumpcourtchambers.com/blog/ten-cases-restrictive-covenants-2015-%E2%80%93-2016

Undervalued

steampowered wrote: »

I also confirm what sangie is telling you.

The fact that someone has stopped working for an employer does not necessarily mean that their employment contract has terminated. It is very common for employment contracts to contain provisions which apply after the end of employment.

The two most common examples are restrictive covenants (which typically say you can't compete with the employer or take their clients during your employment or for a limited period thereafter) and confidentiality clauses (which typically say you can't use the company's confidential information after you have stopped working for them).

You can verify this for yourself by googling for 'restrictive covenants'. There is a detailed body of law surrounding which looks at how long these can apply for after the end of someone's employment. There are literally hundreds of reported cases we could cite which concern a situation in which post-employment covenants contained in an employment contract have been enforced by a court.

Exactly!!!

Tripledrop

Once again thanks for the discussions.

Quick question... Is there a need for some sort of loss to have occured (financial or otherwise) for a court to consider a case?

In this case, the email went out to a large list of people (by accident also including at least the one old customer) and no sales have been made (or even attempted) to the old employers customers, so no money/business has been lost by the old company.

So what would the employer be claiming for?

SeanG79

The email would be soliciting existing customer(s) of the employer. Pretty sure the restrictive covenant will cover solicitation of existing customers.

At the very least, the employer will be seeking an injunction to prevent their customers being solicited. Should you or your colleague in this instance contest whether the restraint clause can be enforced, there will be associated court costs...

Undervalued

Tripledrop wrote: »

Once again thanks for the discussions.

Quick question... Is there a need for some sort of loss to have occured (financial or otherwise) for a court to consider a case?

In this case, the email went out to a large list of people (by accident also including at least the one old customer) and no sales have been made (or even attempted) to the old employers customers, so no money/business has been lost by the old company.

So what would the employer be claiming for?

To get any compensation then yes, they would need to have actually suffered a quantifiable loss.

They could also potentially seek an injunction which is basically a court order telling him to stick to the terms of the contract. If that was granted and if he broke the terms he would then be committing a criminal offence.

Ultimately it comes down to whether the terms of this restrictive covenant are legally enforceable which only a court can decided.

macca1974

this has always been a messy area when it comes to what you can and can't do. but in my experience (which is a different industry which often includes 6 monthly restrictions), the general way that people have played it is to not take the P**s. which it does appear that your mate has done.

If you are going to do mass marketing, then you don't do it to your previous customers. however most people (myself included) I know of generally know that they are leaving a company and when they are sat down with their better contacts, will mention that they are leaving for "somewhere similar but better" and then mention "i'm keeping my old mobile number if you want to get hold of me". That way if the customer contacts you independently then you can deal with them, just do it carefully for six months.

The other side of this that I have seen was somebody else leaving for a new company and then blatantly contacting all the best clients and bringing them over to the new firm. The old firm took them to court and I recently had a few beers consoling the chap because he had just agreed a £60K out of court settlement.

steampowered

The employer could potentially claim two things - damages plus an injunction.

In order to claim damages, the employer would have to demonstrate quantifiable financial loss as a result of your mate's actions. They would need proof of this, for example if it could prove that it suffered lost sales as a result of one its clients moving to your mate's new employer.

An injunction would only be awarded if it is required. This would probably require the employer to demonstrate that your mate has breached the restrictive covenant or is likely to breach it.

The real financial risk associated with an injunction is legal costs. If an injunction is successfully obtained, your mate would be ordered to pay the employer's legal costs which could easily be thousands of pounds.

It might be better to try and get the employer to agree that it will not pursue claims for past breaches of the restrictive covenant (provided he does not breach it again).

Tripledrop

Thanks again for the advice, appreciate it. The financial part is null-and-void then as he hasn't taken any customers, but the injunction is possible.

The old company are bullies though, so probably won't actually do this, more likely just wanting to scare him off, especially knowing he has a new kid on the way so money is tight.

I'll try to get an update from him from his solicitor

sangie595

steampowered wrote: »

The employer could potentially claim two things - damages plus an injunction.

In order to claim damages, the employer would have to demonstrate quantifiable financial loss as a result of your mate's actions. They would need proof of this, for example if it could prove that it suffered lost sales as a result of one its clients moving to your mate's new employer.

An injunction would only be awarded if it is required. This would probably require the employer to demonstrate that your mate has breached the restrictive covenant or is likely to breach it.

The real financial risk associated with an injunction is legal costs. If an injunction is successfully obtained, your mate would be ordered to pay the employer's legal costs which could easily be thousands of pounds.

It might be better to try and get the employer to agree that it will not pursue claims for past breaches of the restrictive covenant (provided he does not breach it again).

I agree, but I think there is another risk which is higher. The new employer is taking a risk that action will fall on them. The easiest way to mitigate this risk is to dismiss him. This is actually the most common outcome, in my experience. It doesn't come down to what is or isn't enforceabl, but what risk they are prepared to take on him, and the answer is usually "none " .

To be totally objective, whatever your view of the old company, they are operating within their legal rights and if you were them, you would do the same thing! This is not about bullying. It is about protecting their business.