How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Ben Jones Your Own Question
Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 48190
Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
29905560
Type Your Employment Law Question Here...
Ben Jones is online now

Hello. I am being made redundant from the marketing agency

Resolved Question:

Hello. I am being made redundant from the marketing agency where I have worked for the past two years - effective 4 weeks today. There are only three of us employed here and we were told there were two redundancies to be made. I offered to do this voluntarily as I'm the highest paid and knew I would be selected anyway.

There are a few restrictive convenents in my contract though, which apply for 12 months and are detailed below for reference. I have a few questions regarding these. Firstly, is there anything that make them void if I am made redundant, rather than if I just got a different job?

Secondly, the first covenent would obviously make it very hard for me as it covers pretty much everything I am qualified and experienced in. Unless I had a complete career change, or moved further away, it would effectively make me unemployable.

I'm just wondering whether this covenent can be enforced? I spoke to ACAS and they said that if it is too restrictive then sometimes they can't enforce it, but I just want to be sure before I try working freelance if I am not allowed to. I'm also not sure there is any legitimate business interest being protected by my current employer, other than not wanting competition (not sure if this is relevant, but I would be targeting what I know to be a different type of customer and going on a very different pricing structure)

I totally understand that I can't try and poach clients to leave my current employer and come with me which is absolutely fine. However, we occasionally work with freelancers who I am friendly with. These are not employees. They are people like graphic designers who charge the company I work for. Would this covenent mean that if one of these graphic designers had a client ask them for a copywriter, that they couldn't then refer them to me? As a freelancer, I will be charging less than half of what the agency I currently work for charges. These are people that would never have come to my current employer anyway. Also, we once had a meeting with an SEO agency that employes freelance copywriters. Could I freelance for them? All we ever had was a proposal/quote from them, which we never went with due to the agency not having enough money. I'm just wondering how far this covenent can be taken?

Finally? Can I actually tell people I was made redundant? I don't want people thinking I was fired! There is a confidentiality agreement that says I cannot disclose confidential information regarding the business or finances. I was made redundant as we lost our biggest client and there is no money coming in, which is obviously a financial reason.

Thank you!

Lauren

1. "within the area of 30 miles of the company's base be engaged in any activity or businesses which shall be (or will be once operational) in competition with the business of Marketing, PR, Graphic Design, On-line marketing, web design, web development, search engine optimisation supply and service and with which you were involved to a material extent during your employment."

2. canvass, solicit or endevour to entice away or do business with any person, firm or organisation who has at any time during the period of tweleve months immediately preceding the termination of your employment done business with or been a client or cusomter of the company with whom you had dealings (nor attempt to discourage any such person, firm or organisation from dealing with the company). Although not exhaustive the company shall publish a list of its clients/cusomters ona quarterly basis which apply.

3. Provided that nothing above shall prohibit your involvement in any business if your duties and responsibilties for that business do not involve you in the provision of any provision of any products or services which are in competition with the business described above."
Submitted: 3 years ago.
Category: Employment Law
Expert:  Ben Jones replied 3 years ago.

Ben Jones :

Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today. What would you like to achieve here please?

Customer:

Hi Ben. I emailed some questions regarding restrictive covenants in my contract and the effect they have on me as I am being made redundant. Did you receive those already or should I copy and paste?

Ben Jones :


OK, thank you, XXXXX XXXXX this with me - I will look into this for you, get my response ready and get back to you on here. No need to wait around and you will get an email when I have responded, thank you



Customer:

Brilliant. Thank you.

Ben Jones :

Thanks for your patience. So to answer your queries:


 


Firstly, is there anything that make them void if I am made redundant, rather than if I just got a different job?


 


The restrictive covenants will continue whether you are made redundant or leave voluntarily to find another job. The only time they would be made void is if the whole contract is void, such as through the employer’s serious breach of contract.


 


Secondly, the first covenent would obviously make it very hard for me as it covers pretty much everything I am qualified and experienced in. Unless I had a complete career change, or moved further away, it would effectively make me unemployable. I'm just wondering whether this covenent can be enforced?


 


Post-termination restrictive covenants are a rather common occurrence in employment relationships. An employer would want to protect their business from a departing employee's knowledge, business connections, influence over remaining staff, etc. However, a covenant that restricts an employee's post-termination activities will be automatically unenforceable for being in restraint of trade, unless the employer can show that it was there to protect a legitimate business interest and did so in a reasonable way.


 




  • Goodwill (including supplier and customer connections)

  • Trade secrets and confidential information

  • Stability of the workforce


 


An employer cannot apply a restrictive covenant just to stop someone competing with their business, but it can seek to stop that person using or damaging their LBIs by using a reasonably drafted covenant. There are a few different types of restrictive covenants that can be applied, these being:


 


1. Non-solicitation covenants are there to prevent an employee from enticing away the customers of their ex-employer and as long as they are reasonable are the most commonly enforced type of restriction. Solicitation generally means “directly or indirectly requesting, persuading or encouraging clients of the former employer to transfer their business to their new employer". To be valid, the covenant should be restricted to customers with whom the employee had contact during a specified period before leaving. Other relevant factors may include the employee's level of seniority in the business, the extent of their role in securing new business and the length of similar restrictions in the employment contracts of competitors.


 


2. Non-dealing covenants are a wider restriction and not only restrict solicitation but any other general contact with clients. The enforceability of a non-dealing covenant will depend on the interest being protected and can be influenced by a substantial personal connection the employee enjoys with a specific client. However, such a covenant will not be enforceable if it prevents any sort of contact with the client. The restriction must be focused on the specific type of contact that would directly affect the employer's business.


 


3. Non-competition covenants prevent an employee from working with a competing business or setting up to work in competition with their ex-employer. Such general restrictions are seen as a restraint of trade and will be difficult to enforce. They will only be seen as reasonable if in the process of working in competition, the employee uses trade secrets or sensitive confidential information belonging to their ex-employer, or their influence over clients is so great that such a restriction is necessary. The length of the restriction and its geographical coverage will also be relevant.


 


Whilst restrictive covenants are mainly used as a scare tactic by employers, if an employee has acted in breach of a covenant and the employer is intent on pursuing the matter further they can do so. The following are potential outcomes if the employer takes legal action:



  • Obtain an interim injunction preventing the employee from doing certain things that would make them in breach of the restrictive covenant

  • Seek compensation for damages that have directly resulted from the breach of the covenants


 


As you can see there are no hard and fast rules on restrictive covenants. Whether a specific restriction is enforceable will always depend on the individual circumstances, the interest being protected and whether it has been reasonably drafted. The above principles are what the courts will consider when deciding whether a restriction is going to be legally enforceable. It should give you a good idea of what to look for in your situation and decide what the chances of this being pursued further are.


 


 


 


 


Would this covenent mean that if one of these graphic designers had a client ask them for a copywriter, that they couldn't then refer them to me?


 


Not necessarily, the less the employer’s business is affected by your actions on leaving the more chance you have of claiming these are reasonable and should be allowed.


 


Finally? Can I actually tell people I was made redundant?


 


As long as this is what actually happened, i.e. you volunteered yourself for redundancy and the employer still made you redundant, paid you redundancy and so on. This is not the same if you had actually resigned and not received redundancy pay. So as long as you were actually made redundant, you can say so.

Customer:

Thank you. That's all very helpful. Please could I have a little bit more information on what the following means?

Customer:

  • Goodwill (including supplier and customer connections)

  • Trade secrets and confidential information

  • Stability of the workforce

Ben Jones :

Well, these are examples of Legitimate Business Interests, which is what the employer must try to protect to claim that the restrictions are enforceable. So as mentioned it includes goodwill (such as clients or supplier connections and details), any trade secrets the employer has or their confidential business information and also the stability of the workforce, meaning its employees so they can try and prevent you from poaching their employees

Customer:

Thank you. I understand that better now. Are those the only legitimate business interests they can claim? Or are there others? What I am understanding, is that essentially, I will be OK to freelance as a copywriter so long as I don't poach and clients, suppliers or staff or divulge any information that is specific to my current employer. The fact that I might be seen as competition (despite a different price point and marketing strategy) is irrelevant?

Ben Jones :

No, these are the most common examples, there is no actual list of LBIs. You are correct about the other assumptions - simply acting in competition is not enough to stop you, and you must be impinging on their LBIs to be stopped

Ben Jones :

Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this? Thanks

Customer:

Hi Ben,

Customer:

Thank you. This has all been a great help. Just one more question and then I'll leave you alone! What if I don't go after a client, but they came to me and wanted to work with me? It hasn't happened but I can see that it might.

Ben Jones :

This would usually be covered by a non-dealing restriction, but I do not see you having one, so if you have not approached them first then it should be ok

Customer:

Fabulous. Thank you. I'll fill in the rating below thing now. Thank you for all your help.

Ben Jones and other Employment Law Specialists are ready to help you