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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 44957
Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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I am a freelance producer with a limited company. Currently

Customer Question

Hi,
I am a freelance producer with a limited company. Currently I am a contractor for a video production company, working mainly with one of their clients. Their client is really unhappy with various aspects and is planning not to renew contracts next year. They do however want to work with me on a freelance bases.
I have signed on behalf of my company a terms and conditions agreement with the video production company which says I cannot work with any of their clients for 2 year grace period.
Where do I stand and is there any loop holes or options to get around this?
Thanks,
Andrew
Submitted: 1 year ago.
Category: Employment Law
Expert:  Ben Jones replied 1 year ago.
Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Will they lose the company's business if you work with them directly?
Customer: replied 1 year ago.

They are going to lose the company's business regardless of whether I do or not.That decision has been made.

Expert:  Ben Jones replied 1 year ago.
You are subject to a restrictive covenant in your case. 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. 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. However as the business is going to be lost anyway and you are not the one instigating this or chasing the client it may be difficult for the employer to try and enforce such restrictions as they may be deemed unreasonable in the circumstances.
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
Expert:  Ben Jones replied 1 year ago.
Hello, I see from your rating that you were not entirely satisfied with the service I have provided you with. Please remember that you are only rating the service you received, not the contents of my answer. As a lawyer I have to be honest and quote the law as it is and it may not necessarily be the answer you wanted to receive - unfortunately there is little I can do about this. My main priority is to ensure that you leave our site satisfied. Therefore, please get back to me with any further questions you may have or let me know if I can clarify anything further for you and improve your rating. Thank you

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