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taratill
taratill, Solicitor
Category: Employment Law
Satisfied Customers: 6305
Experience:  15 years experience of advising on employment law matters
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I have handed in my resignation to go to a competitor in my

Resolved Question:

I have handed in my resignation to go to a competitor in my field (although the competitor is an independent business) where i currently work is a huge company.
They have threatened to take legal action if i go and work for them for 6 months.
Would these covenants stand up in court? - also everyone else that has left to go to a competitor has not been issued with this.- My companies reasons are that they were not interested in keeping those employees, but are interested in keeping me.
Submitted: 2 years ago.
Category: Employment Law
Expert:  taratill replied 2 years ago.

taratill :

Hello my name is XXXXX XXXXX I am happy to help you today.

taratill :

Is your employer likely to suffer a financial loss if you go to work for the competitor?

Customer: Hi.
Customer: I work in media- sell advertising for local press.
Customer: Asvertisers ate likely to also spend money with me but does not mean they will stop advertising with my current employer
Customer: I currently work for a company that brings in over 200k in sales a month and are the biggest company in the region
Customer: I want to go and work for a new employer that only turns a 10k profit a month.
taratill :

So it's not the case that you are likely to take customers with you who will stop or reduce their spend with your current employer as a result of your move?

Customer: They won't stop using them no.
Customer: Not as a result from me, they may stop using them as a result from a decision they make themselves.
taratill :

Ok the basic position with restrictive covenants is that they are only enforceable to the extent that they are not more widely drafted than necessary to protect a legitimate business interest. If the employer is not going to lose customers or clients as a result of you going to the competitor then the covenants will not be enforceable.

taratill :

Furthermore it will cost the employer tens of thousands of pounds in legal fees alone to try to enforce them.

taratill :

Unless their financial loss is the equivalent of that they simply will not bring proceedings against you as it is uneconomical to do so.

Customer:

So in a nut shell, If i go and work for the competitor they will have to prove that as a result of me selling has affected their business drastically enough for them to take me to court.

taratill :

exactly that.

Customer:

so i would have to 'cost' the business thousands of £ in lost revenue.

Customer:

That must be quite hard to 'prove'

Customer:

what is the likelihood of them getting an injunction preventing me from breaking my covenants if it mean i will be out of a job for 6 months?

Customer:

will the judge see it as i will be out of a job for 6 months or see it as i could have stayed for the current employer?

taratill :

They would have to show a likely loss, again it would cost thousands of pounds for them to bring injunctive proceedings.

taratill :

I'm not sure I understand your last question?

Customer:

the covenants in my contract state that i cannot go and work for a competitor for 6 months, obviously after all of this i dont wish to carry on working at my current employer, If they were to try and make an example out of me and get an injunction, as they can afford it, would the judge be likely to see it as a waste of time as I would effectively be unemployed for 6 months

Customer:

soory for all the questions- Im starting to get quite stressed with the whole situation

taratill :

The judge wouldn't look at it from that point of view. The only question the judge would ask is whether you are about to breach the contract and whether the employer is likely to suffer harm as a result of it. If it finds those facts to be the case they 'may' then grant an injunction to prevent you from working for the competitor in breach of contract.

taratill :

As I have stated before if the harm to the employer is not likely to exist or be significant they will not do this as if they fail they will also be liable to pay your legal fees.

Customer:

So i am assuming that most of these cases dont get followed up? - What happens if they try and prove that it will cost their business money, would they be looking at how much it would cost them before they would proceed

Customer:

and over what period of time can they try and show losses for? - The 6 months period or longer?

taratill :

Yes, the 2 key points that they lawyers will consider are whether the covenants are enforceable (i.e. whether they protect a legitimate business interest) and the likely losses they will suffer. Often employers do threaten proceedings but do not go ahead.

Customer:

ok so its safe to say i could probably go ahead and start my new job?

Customer:

what about a counter sue for unreasonable behaviour

taratill :

I cannot say whether it is safe or not unfortunately as I do not know the position from your employers point of view. You cannot claim for unreasonable behaviour as on the face of it it is reasonable to sue in breach of contract in theses circumstances. All you can do is weight the risks. One thing you could do is take the covenants to your new employer and tell them that the employer is threatening action against you and ask if they will pay your legal fees and costs in the event they do sue.

Customer:

yes they already know about these as the company is also threatening to take action against them also.

Customer:

So my current employer just has to prove that there could 'potentially' be a loss, they do not have to prove that there is a loss?

taratill :

It depends on whether they are taking an injunction or suing for damages. For the injunction it's potential loss , if they sue for damages they have to prove real loss.

Customer:

ok brilliant

Customer:

thank you very much

taratill, Solicitor
Category: Employment Law
Satisfied Customers: 6305
Experience: 15 years experience of advising on employment law matters
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