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  • FIRST POST
    • in2deep
    • By in2deep 15th Mar 18, 8:53 PM
    • 334Posts
    • 169Thanks
    in2deep
    Restrictive covenants
    • #1
    • 15th Mar 18, 8:53 PM
    Restrictive covenants 15th Mar 18 at 8:53 PM
    Iíve been working for the same employer for 13 years now I donít have a signed contract as I began work based on a formal letter of appointment.
    The company is now switching to a Ltd company and new contracts are being drawn up with restrictive covenants,Iíve never seen one nor do I understand them.
    We are a small company of less than 10 in a tiny town.
    It states that if I leave I canít work for anyone in competition or any company in a the same or similar role within 5miles. Is this normal.??

    It also states that my role will have a 12weeks probationary period (really,after 13years??)
    Does this mean Iíve lost any time served benefits from the last 13years as well.?

    I know Iím going to have to sign it eventually but we are being given the chance to discuss concerns before we do.
    'Beware of little expenses. A small leak will sink a great ship'. -Benjamin Franklin.

    £80k+ and rising at a frightening rate. Holding steady now.
    Only 30K left to deal with.
Page 1
    • steampowered
    • By steampowered 15th Mar 18, 9:34 PM
    • 2,488 Posts
    • 2,408 Thanks
    steampowered
    • #2
    • 15th Mar 18, 9:34 PM
    • #2
    • 15th Mar 18, 9:34 PM
    It is probably a generic contract for all employees, including new people hired in future.

    I don't think you need to be worried about the probation clause as you have long passed that.

    You should retain all time served benefits, as your continuity of employment is not affected by a new contract.

    Restrictive covenants are common these days. A covenant saying you won't work for a competitor within 5 miles for a short period of time (e.g. 3 months) is probably common.

    If the restrictive covenant stops you from working for any competitor it is worth querying though, unless your company does something very niche. The key question is would it stop you getting another job if you decided to leave in future.
    Last edited by steampowered; 15-03-2018 at 9:37 PM.
    • Energize
    • By Energize 15th Mar 18, 9:56 PM
    • 442 Posts
    • 193 Thanks
    Energize
    • #3
    • 15th Mar 18, 9:56 PM
    • #3
    • 15th Mar 18, 9:56 PM
    Restrictive covenants are largely unenforceable, companies can't deny you the right to earn a living.
    • in2deep
    • By in2deep 15th Mar 18, 10:21 PM
    • 334 Posts
    • 169 Thanks
    in2deep
    • #4
    • 15th Mar 18, 10:21 PM
    • #4
    • 15th Mar 18, 10:21 PM
    Thank you, the business is very niche although we trade world wide, there are probably no more than 5 companies in the uk interested in what we do. Think of it like this ,there are many garages out there fixing cars,some only fix Fords even less only fix one type of ford, by comparison we only fix one type make year and colour. (We donít actually fix cars but you get the idea)

    Our nearest direct competitor is about 90miles away so Iím hardly likely to go there.
    'Beware of little expenses. A small leak will sink a great ship'. -Benjamin Franklin.

    £80k+ and rising at a frightening rate. Holding steady now.
    Only 30K left to deal with.
    • BooJewels
    • By BooJewels 15th Mar 18, 11:14 PM
    • 273 Posts
    • 203 Thanks
    BooJewels
    • #5
    • 15th Mar 18, 11:14 PM
    • #5
    • 15th Mar 18, 11:14 PM
    My husband had a case many years ago where he changed jobs and his former employer started legal action against him, enforcing the covenants in his contract in respect of working for competition.

    We went to see our solicitor and he read the contract and guffawed, saying that they were so restrictive as to be unenforceable (as Energize said earlier) - it would prevent him making a living in his chosen profession and he could only do so by moving house. So he wrote to them in response, effectively saying 'go away and stop being so silly' and that was the last we heard of it.

    You can understand them putting in covenants about not taking client details with you when you leave or directly approaching them to poach the work, but they can't control who you work for.
    • agrinnall
    • By agrinnall 16th Mar 18, 9:09 AM
    • 20,117 Posts
    • 15,840 Thanks
    agrinnall
    • #6
    • 16th Mar 18, 9:09 AM
    • #6
    • 16th Mar 18, 9:09 AM
    Our nearest direct competitor is about 90miles away so Iím hardly likely to go there.
    Originally posted by in2deep
    I don't see how the covenant can possibly affect you if there is no direct competitor within the 5 mile range anyway. The only issue would be if it prevented you setting up on your own to do the same job, does it?
    • Ja7188
    • By Ja7188 17th Mar 18, 10:49 AM
    • 151 Posts
    • 163 Thanks
    Ja7188
    • #7
    • 17th Mar 18, 10:49 AM
    • #7
    • 17th Mar 18, 10:49 AM
    From the OP's description, I'd say that the covenant is too restrictive to be enforceable. I suspect it would be more likely to stand up if he/ she was only prevented from soliciting customers of the current employer - although as I understand it, even then it would be challenge to enforce.

    If an individual moves jobs and break their covenants, I think (and I could be wrong) that if their previous employer wanted to try to enforce them, they would have to take action against the new employer as well as the individual themselves. If this is true, it would help explain why people so often seem to get warning letters and no attempt to take matters further...
    • anamenottaken
    • By anamenottaken 17th Mar 18, 10:57 AM
    • 4,146 Posts
    • 3,632 Thanks
    anamenottaken
    • #8
    • 17th Mar 18, 10:57 AM
    • #8
    • 17th Mar 18, 10:57 AM
    I would just suggest that when you look at that contract when you actually receive it you should ensure that it gives the date for the commencement of your continuous employment as the date 13 years ago. As long as it does that, your long-service benefits should continue. However, depending on what those benefits are, your employer may remove them in the future, just as they could over the past 13 years.
    • in2deep
    • By in2deep 17th Apr 18, 9:28 PM
    • 334 Posts
    • 169 Thanks
    in2deep
    • #9
    • 17th Apr 18, 9:28 PM
    • #9
    • 17th Apr 18, 9:28 PM
    The amended contract now says
    The company shall pay £100 to you as consideration for entering into the restrictive covenants
    Is this a bribe.? Can I refuse it and then not adhere to it.?
    'Beware of little expenses. A small leak will sink a great ship'. -Benjamin Franklin.

    £80k+ and rising at a frightening rate. Holding steady now.
    Only 30K left to deal with.
    • Ja7188
    • By Ja7188 18th Apr 18, 8:31 PM
    • 151 Posts
    • 163 Thanks
    Ja7188
    How long after your employment ends do they want to keep the restrictions running for? Unless it's a pretty short period, £100 doesn't sound like a good deal...

    I don't think you're under any obligation to sign it, but your working life may become difficult if you're seen to be making a fuss.
    • ReadingTim
    • By ReadingTim 19th Apr 18, 11:50 AM
    • 2,652 Posts
    • 3,784 Thanks
    ReadingTim
    The amended contract now says
    The company shall pay £100 to you as consideration for entering into the restrictive covenants
    Is this a bribe.? Can I refuse it and then not adhere to it.?
    Originally posted by in2deep
    No, it's a recognition that you are giving up some of your rights and providing a degree of compensation for that fact. Whether you feel £100 adequately covers it is up to you - you could negotiate for more, or state that you won't agree to the inclusion of that clause in the contract at all. They in turn can agree to a greater payment, the removal of the clause in question, or neither. You either try further negotiation or you reach a decision: accept what's on offer, or don't sign the contract, and essentially do yourself out of a job going forward.

    What you cannot do is sign the contract then ignore the terms set out within it! With regard to overall enforceableness, a 5 mile range isn't exactly massive, so you might struggle with that, unless you were doing something so specific and geographically concentrated that it couldn't be done anywhere else....
    Last edited by ReadingTim; 19-04-2018 at 11:53 AM.
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