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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
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Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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My old employer is threatening me with legal action

Resolved Question:

My old employer is threatening me with legal action for Breaching my restrictive covenants in my contract. I felt this was an acceptable action to take because although I gave my my notice that I no longer wish to work for the company in writing, he chose to not pay my final notice pay.
Is it possible to argue that because he had breached the contract by not paying me my final months wages, I was not in the wrong to take on a job by another employer in the same industry in order to earn a living?
Are all the terms in my original contract now void because of this also?
Submitted: 2 years ago.
Category: Employment Law
Expert:  Ben Jones replied 2 years ago.
Hello, my name is ***** ***** it is my pleasure to assist you with your question today. What exactly were the restrictions preventing you from doing?
Customer: replied 2 years ago.

This is an extract from the contract of employment I was given:

23 Non enforcement does not waive the Employer rights to enforce this contract

The Employer’s failure to enforce its rights under these terms and conditions of

employment immediately following a breach of these terms and conditions by you becoming known to

the Employer does not amount to an acceptance of your breach by the Employer or waiver of

the Employer’s right to enforce its rights so that action against you by the Employer for your breach

can be taken at a later date.

24 Post termination Non –Competition

Without the written permission of the Company (such consent to be withheld only so far as

may be reasonably necessary to protect the legitimate interests of the Company), you hereby agree with the Company that you will not, in competition with the business being carried on by the Company or an associated employer in England at the end of your employment and with which you were concerned in the course of your employment and whether on your own account or for any other person, firm or company directly or indirectly

for three months after the termination of your employment, solicit or endeavour to entice

away from the Company or an associated employer, accept orders from or have any

Business dealings with any person, firm or company

a. who or which in the two years prior to the termination of your employment shall have been a client of the Company or an associated employer or to whom or which in the year prior to the termination of your employment the Company or an associated employer was actively and directly seeking to supply services and

b. with whom or which you had material personal dealings in the course of your employment in the year prior to the termination of your employment.

For three months after the termination of your employment, solicit or endeavour to place in

employment or in or under a contract provide services to any person who was a candidate at any time during the previous two years and with whom or which you had material personal dealings in the course of your employment in the year prior to the termination of your employment

For the three months after the termination of your employment, be engaged or interested

(whether as principal, partner, officer, servant, agent, consultant or controller of any shares or debentures), within a two mile radius of the Company’s or an associated employer’s office or offices at which you worked for a material part of your working hours during the year prior to the termination of your employment, in any business which is in competition with any business carried on by the Company or an associated employer at the termination of your employment or during the 12 months prior to that date, in an area of the business in which you were concerned or involved to any material extent in the two years prior to the end of your employment (always excepting that nothing in this clause shall prevent you becoming a registered holder of not more than 3% of any class of publicly quoted securities of any company)

For three months after the termination of your employment, enter into a contract

of employment or self-employment with

a. in any business which is in competition with any business carried on by the Company or an associated employer at the date of termination of your employment or during the 12 months prior to the date and

b. in which you were concerned or involved to any material extent in the two years prior to the end of your employment

For three months after the termination of your employment, solicit or endeavour to entice

away from the Company or an associated employer or employ or procure the employment of any person who was at the termination of your employment employed by the Company or an associated employer during the 12 months prior to the termination of your employment, with whom you had material dealings during the 12 months prior to the termination of your employment and who was not, at the termination of your employment a trainee.

From what I can understand, it restricts me from working for a competitor in the same industry as my old company, and from approaching any clients. I'm confused, become some people say it isn't correct to stop me working to earn a living and others say he can.

I'm also confused as to whether the contract is still enforceable since he didn't pay my final months pay to me. This would be something I would consider using as a defense if I were taken to court.

Expert:  Ben Jones replied 2 years ago.
It is possible that the contract has become void because you were not paid your notice period. A breach of contract like that can make the whole contract void and release you from these covenants. However that depends on the advice in the previous query where you would need to prove that there was a breach by them in the first place. Saying that the restriction could be enforceable anyway.
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. But a direct restriction to work for a competitor if you are not breaching any LBIs is unlikely to be enforceable.
I hope this has answered your query. Please take a second to leave a positive rating, or if you need me to clarify anything before you go - please get back to me and I will assist further as best as I can. Thank you
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 46790
Experience: Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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