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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 47862
Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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non- compete clause or covenant-not-to-compete (CNC). Ive

Resolved Question:

non- compete clause or covenant-not-to-compete (CNC).

I've worked with my current employer for 13 years and signed a CNC about 7 years back & wanted to know if they are really legally binding?

I have been offered a position within another company who is not classed as a direct competitor but still within the same industry sector.
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.

Ben Jones :

Wat would you be doing with the new employer, would you be using any confidential information or trade secrets, poaching clients, etc from the old employer?

Customer: Dealing with some of the same companies , currently I work for a
Customer: specialised logistic company & the new company wants to develop but is currently classed as a freigbt
Customer: forwarder.
Ben Jones :

Will your move and future actions in the new company cost the new one any business?

Customer: There is a possibility but difficult to say 100%
Ben Jones :

How long is the restriction for?

Customer: 6 - possibly 12 months.
Ben Jones :

ok leave it with me please, I will get my response ready and you will hear from me around lunchtime

Customer: Appreciate your assistance.
Ben Jones :

Thanks for your patience. 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.


 


Legitimate business interests (LBIs) are commonly accepted to include:



  • 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.


 


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.

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