10 year restrictive covenants/conditions

up4thecup

Hi all,

Really appreciate everyone's comments here. I want to stress that I'm not looking to stick it to my employees, I'd love to work along side them rather than against them. Though yes I would be competing in terms of generating business they may or may not have got (just a slice of the market).

To give it some context, we are a small manufacturing company. We only have 9 employees, two are part time (one of these looks after HR). Average turnover around £750k. In 2007 I joined as a sales and marketing administrator, brought in to help process sales leads, improve the website, etc.

Fast forward 10 years and I'm now sales and marketing manager, which sounds great but other than salary, experience, etc. not much has changed. Though the role has many frustrations, I do enjoy it. But I'm ambitious, hungry and would like to see more rewards for my efforts. I truly believe that I could earn a better living going alone, and I know it will be tough, particularly at the beginning but I'm up for it.

Manufacturing aside, I cover all parts of the company. I do the marketing, I convert the sales, I cover our finance director when they are off/away. When our dispatch lady is off I pack the products and ship them.

I'm not planning on manufacturing, what I would like to do is focus my efforts on one of the industries. Solutions would compromise of equipment, consultancy, and training.

I would need to work with a Company (would be happy to work with my existing employers should things work out), in terms of distributing products, though there are alternatives suppliers who I could use as well/instead. There are other Companies who serve these markets but do not offer value in terms of total solutions and do not specialise in either the products or industry.

Funnily enough, our MD made a similar move 20 years ago. He was a distributor for another company and then gave that up to start manufacturing, so I guess he know's first hand what it takes to make a move like this.

I had thought of finding a partner to work with and just running all communications between the two companies through them, or setting up a separate email address, but dismissed it immediately as I want to be open, honest, be on good terms whatever happens, and not worry about who finds out what.

There is only the MD who I could speak to, but I won't approach him until everything is in place and I'm confident that it's a realistic option and I won't get sued for being ambitious and making the jump (I take on board I will need to speak to a HR expert).

steampowered

I think you may be confusing 'restrictive covenants' with confidentiality undertakings. They are not the same thing.

The two traditional restrictive covenants are (1) an obligation not to complete with your former employer (non-compete) and (2) an obligation not to employ your former employee's employees (non-solicit).

If the 10 years applies to a true restrictive covenant, that is not enforceable. End of. No grey area. The recent legal disputes in this area have been around whether 18 months or 2 year clauses were too long on the specific facts of those cases - all of which involved director-level employees. 10 years would be completely wide of the mark.

However, confidentiality undertakings are not true 'restrictive covenants' and different rules apply. An obligation not to misuse confidential information belonging to your employer is implied by law and would exist for so long as the information remains confidential regardless of what you signed. A 10 year confidentiality provision is common and it is also common for confidentiality undertakings not to have any expiry period.

So the confidentiality obligation is probably enforceable. However it should not stop you from leaving. You simply have to be careful not to take the employer's confidential information with you - for example don't take a copy of their client list on the way out.

up4thecup

steampowered wrote: »

I think you may be confusing 'restrictive covenants' with confidentiality undertakings. They are not the same thing.

The two traditional restrictive covenants are (1) an obligation not to complete with your former employer (non-compete) and (2) an obligation not to employ your former employee's employees (non-solicit).

If the 10 years applies to a true restrictive covenant, that is not enforceable. End of. No grey area. The recent legal disputes in this area have been around whether 18 months or 2 year clauses were too long on the specific facts of those cases - all of which involved director-level employees. 10 years would be completely wide of the mark.

However, confidentiality undertakings are not true 'restrictive covenants' and different rules apply. An obligation not to misuse confidential information belonging to your employer is implied by law and would exist for so long as the information remains confidential regardless of what you signed. A 10 year confidentiality provision is common and it is also common for confidentiality undertakings not to have any expiry period.

So the confidentiality obligation is probably enforceable. However it should not stop you from leaving. You simply have to be careful not to take the employer's confidential information with you - for example don't take a copy of their client list on the way out.

Thank you for this, I think you may be right. I'd never heard of the term restrictive covenant until I started asking people about my situation, so obviously have that mixed up. There are no restrictive covenants in my contact, it's just this confidentiality agreement.

I'm still unsure as to whether this gives me the option to leave and do my own thing? I wouldn't look to take any customers, as I'd be focused on a bit of a gap in the market whilst also picking up work from existing markets.

Below is a copy of the confidentiality agreement if this helps:
Page 1
Page 2

getmore4less

To give it some context, we are a small manufacturing company. We only have 9 employees,


Would there be an opportunity to develop the current company in the direction you want to take out on your own and become part owner.

steampowered

up4thecup wrote: »

I'm still unsure as to whether this gives me the option to leave and do my own thing?

You certainly have the option to leave and do your own thing.

However you need to be careful to comply with the agreement you have signed, to reduce the risk of your former employer claiming that you are in breach of the agreement.

In summary, the confidentiality agreement you linked to requires you to keep the company's "confidential information" - such as designs, business plans, customer lists and so on - confidential.

As such you should be fine so long as you are not taking "confidential information" from your employer.

There is nothing in that agreement which stops you contacting prospective customers. However, the agreement does mention that "prospective customers (leads)" are considered confidential information.

If you were to take a list of customers when you leave, that would be a breach of your confidentiality agreement. But there is nothing in that agreement stopping you from developing your own list after you have left.

TBagpuss

Yes, looking at that it is a confidentiality agreement, not a restrictive covenant. So you can set up your own business,but you cant take with you nay information about the existing employers business (including names or contact details of clients) and would likely be in breach of the agreement were to to 'poach' their clients, but getting in touch and suggesting they use you rather than the previous company