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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 47904
Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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Hi, I work for a company that complete self assesmemt tax return.

Resolved Question:

Hi, I work for a company that complete self assesmemt tax return. I am giving my notice in and starting out on my own, however my contract says if my contract is terminated my me or my employer then I am not allowed and covenant with the employer and that I will not have any business contact whatsoever with any present clients of the company for a period of 1 year.the company I work for was taken over in 2012 and my contract is signed by me and the ex director who sold the business. Where do I stand

Regards
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 :

Do you intend to contact clients of your current employer please?

Customer:

Yes, as these clients will not come back if I'm not here anyway.

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:

If these clients found me through my own advertising would this be a problem? as they have found me but the company completed there tax returns year ending 2013.

Ben Jones :

The fact the contract was signed by an ex-director is a non-issue because the rights and liabilities of the old company would have been transferred to the new one and with it the contract and its terms So the old contract would still be valid in the circumstances.


 


What we have here is an example of a restrictive covenant, which can be a 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. 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.


 


So there are many factors that would determine the reasonableness and enforceability if such restrictions – your degree of influence, the overall effect on the business, and so on. If you did not in any way try to solicit these clients away from the business and simply left, set up on your own and minded your own business, only to find your old clients had voluntarily followed you, then that would be much better than if you had actively tried to make them leave and work with you.


 


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.


 

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:

My contract just says what i have told you, nothing more or less. so basically if i started on my own, and advertised in the local newspaper and social networking, and clients that i had previously delt with in an employed capasity, there would not be much my ex employer could do. would it also helped if i got the clients to sign a disclaimer to say they had found me ect.

Ben Jones :

The more ambiguous and general the restriction is the more difficult it would be to enforce. There is no need to get a disclaimer as it would be for the employer to prove you had solicited them or tried to poach them so if it comes to that you could just get a statement from the clients as necessary to say that they were not in any way influence by you

Customer:

Brilliant thanks for all you help and advise

Ben Jones :

you are most welcome, all the best

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