Restrictive covenants - advice needed!

Gavin83

Undervalued wrote: »

There is no reason why they should!

The OP signed up to a contract with this clause. That was his decision. So, unless the clause is legally unenforceable he has chosen to be bound by it.

In that case clearly a business can demand anything in the contract. Maybe business owners should start demanding sex with the new employees wife and their first born as part of the employment contract?

All contract terms have to be enforceable. I'd argue a term that effectively prevents an employee leaving your company unless they're willing to change sector entirely or not work for 6 months is unenforceable. If an employer doesn't want the employee moving elsewhere for a set amount of time they should put them on gardening leave.

Ultimately it's for a judge to decide though.

steampowered

tea_lover wrote: »

Why wouldn't it be enforceable? It's in the contract with the OP has signed. Ok, it's not convenient but that doesn't mean it's not enforceable.

Have a read of https://www.out-law.com/page-7086.

The default assumption of the court is that restrictive covenants which constitute a 'restraint of trade' are void on the grounds of public policy.

The courts will only enforce restrictive covenants in restraint of trade if they are there to protect a legitimate business interest of the employer, and go no further than is reasonably necessary to protect those interests.

A clause which says 'You can't work for a competitor' is extremely broad and quite long. For a restrictive covenant to be enforceable it needs to be much narrower than that unless the employee in question is in an extremely sensitive or senior position.

Unless that applies to the Op, I would think the courts are not going to enforce a clause stopping the Op from working for any competitor. Although the details are important - hence why I asked Op for the actual wording of his clause.

Undervalued wrote: »

Given that the OP has already resigned, unless his employer is willing to allow him to withdraw the resignation that may be his best option.

I personally would be tempted to call the old employer's bluff and go ahead with the new employer.

Saying that the employer might get spooked and withdraw the offer is not a good reason to not begin work there in the first place.

The moral here for the future is don't sign contracts in the hope that they will not be enforced or are not enforceable.

This is not realistic. Most employers will not negotiate their standard employment contracts.

rtho782

These covenants are en forcible. Be very very careful if you decide to ignore it.

Have a read of this case:

http://blogs.lexisnexis.co.uk/dr/wp-content/uploads/sites/2/2015/01/lexisnexisexceleratecumberbatch.pdf

Gavin83

rtho782 wrote: »

These covenants are en forcible. Be very very careful if you decide to ignore it.

Have a read of this case:

http://blogs.lexisnexis.co.uk/dr/wp-content/uploads/sites/2/2015/01/lexisnexisexceleratecumberbatch.pdf

There's no way I'm reading all that but from a quick glance it seems the issue was him using 'secrets' from his previous company and them having paid him money explicitly not to work for a competitor.

That's not the case here. They effectively expect him not to work for 6 months with no money to support himself. It's unrealistic. It's giving the employees little choice other than to carry on working for this employer. Anything that forces a person to remain at a company seems unenforceable in my eyes.

steampowered

rtho782 wrote: »

These covenants are en forcible. Be very very careful if you decide to ignore it.

Have a read of this case:

http://blogs.lexisnexis.co.uk/dr/wp-content/uploads/sites/2/2015/01/lexisnexisexceleratecumberbatch.pdf

In that case, the non-compete covenant was upheld for two reasons:

- There was a settlement agreement under which the employee received £137,500. Including £62,500 that was specifically referable to the non-compete covenant.

- The employee was apparently the only person with the technical knowledge to undertake mobile broadband to ERVs (whatever that means).

And yet even in those circumstances, there was a legal challenge to the clause.

That gives a good example of the kind of case in which a covenant so broad as to stop any type employment with any 'competitor' might be enforced. In the vast majority of cases a covenant like that won't be enforced.

Makkusu

bigdavecox90 wrote: »

I have handed my notice in at work last week, which was graciously accepted (sad to see you go etc) and was honest about leaving to go and work for a direct competitor.

Having arrived into work today, I have been called into a room and a copy of my contract read to me which states essentially that I cannot go and work for a direct competitor within a 6 month period of leaving. Let me add at this point, other employees have gone to 'said' company recently and no action has been taken. I've been advised that as they were not in a role as vital as mean, this is why nothing had been done.

I have stated that I feel I'm being treated unfairly due to the fact that I have been pulled up on this, when others have left and have not?

Essentially, my contract does state the black and white that I can't work for a competitor, but is there anything I can do with the other piece surrounding me being treated unfairly. How can this be allowed?

Please someone advise...

A very desperate Dave.

I'm currently working through a restrictive covenant within the timeframe and radius it says I can't... with a direct competitor.

I acquired legal advice at the expense on my new employer and they ended up providing me a letter of indemnity if I were to be tried at court.

It is very hard to enforce, even when in black in white on your contract. There is a 1 month period for your previous employer to issue an injunction (preventing you from working at your new job), followed by a very expensive and time consuming trial to prove you are causing your previous employer some sort of financial loss. This has to be proven through testimony of loss of clients for example and solid figures...

Basically, it is largely a scare tactic that not many people are educated about.

My advice was to not worry just don't flaunt it around, keep under the radar and away from social media for at least 1 month and you should be fine.

Perhaps you can request for aid from your new employer?

A Barrister will take a lot into account when assessing the validity of your restriction, for some 6 months is a lot, others a little. For my trade, 4 months was reasonable but 25 miles was not - due to the location and commercial activity around me. I would of had to travel 60 miles to the next job, it would of been very unfair and risky to take me to court considering the expense it would have cost them.

My Solicitor told me of a restrictive covenant that WAS upheld in court, it was a 24 month near nationwide restriction. The guy was literally screwed over because his contract was 100+ pages long and had him by the balls, so get yours checked out.

Undervalued

Makkusu wrote: »

I'm currently working through a restrictive covenant within the timeframe and radius it says I can't... with a direct competitor.

I acquired legal advice at the expense on my new employer and they ended up providing me a letter of indemnity if I were to be tried at court.

It is very hard to enforce, even when in black in white on your contract. There is a 1 month period for your previous employer to issue an injunction (preventing you from working at your new job), followed by a very expensive and time consuming trial to prove you are causing your previous employer some sort of financial loss. This has to be proven through testimony of loss of clients for example and solid figures...

Basically, it is largely a scare tactic that not many people are educated about.

My advice was to not worry just don't flaunt it around, keep under the radar and away from social media for at least 1 month and you should be fine.

Perhaps you can request for aid from your new employer?

A Barrister will take a lot into account when assessing the validity of your restriction, for some 6 months is a lot, others a little. For my trade, 4 months was reasonable but 25 miles was not - due to the location and commercial activity around me. I would of had to travel 60 miles to the next job, it would of been very unfair and risky to take me to court considering the expense it would have cost them.

My Solicitor told me of a restrictive covenant that WAS upheld in court, it was a 24 month near nationwide restriction. The guy was literally screwed over because his contract was 100+ pages long and had him by the balls, so get yours checked out.

That is true but the tactic is very often successful. You were lucky that your new employer was willing to pay for you to get legal advice and indemnify you. The majority wouldn't as all too often is is simply easier to walk away and employ somebody else.

So, generally you need to be very desirable to the new employer or they need to have a very principled mindset to take on the risk and expense.

robatwork

As others have said, it's all down to the exact job you are doing and moving to, and the terms of your covenant. Can you post it here?

Your argument about others not being prosecuted holds no water. Thousands of drivers prosecuted for speeding have moaned "but the cars in front of me were going the same speed and they weren't prosecuted". What difference does that make?

pioneer22

See if your new employer will bail you out if it goes to court.