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taratill
taratill, Solicitor
Category: Employment Law
Satisfied Customers: 6307
Experience:  15 years experience of advising on employment law matters
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Good afternoon, Outlining some terms in the following email:

Resolved Question:

Good afternoon,
Outlining some terms in the following email:
'The company' - the company I have worked for/company in question/reference.
'Brokers' - one of the business partner routes, from which the business generates income from.
I have recently been made redudant from a business development manager position in which I have worked in for 1.5 years. My business development targets were to expand the company. ONE of the target routes to expand the company was to acquire brokers.
The reason for my redundancy, which I have in writing, is due to to the fact the company can no longer support the broker route, as it no longer commercially viable, through no fault of my own or my skill set. However, I have acquired a massive amount of business through another route/industry. I do find it highly unfair that the company have made me redudant in the first instance, as I have always hit business targets. The company is paying me 1 month in lieu.
Within my contract it states 2 clauses which make up part of a covenant.
The first clause states I cannot directly solicit an existing customer of the company.
The second clause states, in detail:
'It is an express condition of this agreement, that for a period of 12 months from the termination of this agreement, no approach may be made to an organisation or individual to provide products or services which could be provided by the company.'
My understanding is that they (the company) are stopping me from trading within this industry whatsoever for 12 months. Have I interpreted this right?
I would like to set up a consultancy practice which doesn't affect the company's existing customer base whatsoever. I.e I would be making no contact with their existing customer base which is trading currently with the company.
However, throughout the 1.5 years of being in this industry, I have acquired a lot of business connections which the company is not doing business, which I could help through my skill set and knowledge.
My question is, is this covenant enforceable in what I am looking to set up? As it may mean, I am totally out of the industry/out of work for 12 months unless I went in to another field? I am quite highly paid, which would mean I have to start all over again with a lesser status?
Could you please? Thank you.
Submitted: 1 year ago.
Category: Employment Law
Expert:  taratill replied 1 year ago.
Hello my name is ***** ***** I am happy to help you today.
Does this clause restrict within a certain geographic area or is it any client anywhere?
Customer: replied 1 year ago.
There is nothing there stating a geographic restriction. So I assume it would be any client anywhere, which services could be provided by the company.
Expert:  taratill replied 1 year ago.
Ok thanks, ***** ***** a company is only allowed to rely on a restrictive covenant which is not 'more widely drafted than necessary to protect a legitimate business interest'. It is my view that a clause that purports to prevent you from doing your line of work anywhere in the UK is unenforceable.
If your actions are not going to cause the company to suffer a loss in any event then the employer will not sue you as it costs tens of thousands of pounds to lodge a claim and the claim is limited to their financial loss.
I would therefore suggest that you are safe to proceed on that basis. If the company threatens legal action then you would be wise to take legal advice at the time.
If you have any further questions please do ask. If I have answered your question I would be grateful if you would take the time to rate my answer. Thank you and all the best.
Expert:  taratill replied 1 year ago.
Hello is there anything further you would like to know about this as I can see you have not yet rated my answer which is an important part of the process?
Customer: replied 1 year ago.
If this clause is not enforceable my question would be, why put it there in the first place? Is this a common clause?Also, referencing what you said, 'If your actions are not going to cause the company to suffer a loss in any event then the employer will not sue you as it costs tens of thousands of pounds to lodge a claim.' My questions: Because my consultancy business will be targeting brokers, could the company not prove that ANY broker business out there is business to be had by them and so when I do win broker business as part of my consultancy company, would they not lodge a claim against that?Hope the questions make sense.
Expert:  taratill replied 1 year ago.
Yes it does. Restrictive covenants which are well drafted do protect the employer which is why they are often in employment contracts. Well drafted clauses protect the business interests of the employer and that is perfectly legal.
The clause that your employer has is badly drafted and is likely to be deemed to be unenforceable. They are not allowed to use the clause in the way you have said as this would be preventing you from working. A potential client is not a legitimate business interest if that client could come from anywhere in the UK. The employer may not realise the clause is unenforceable.
Hope that helps I really do not think you need to worry about this.
Please do take the time to rate my answer as I am not otherwise credited for my time.
Customer: replied 1 year ago.
Sorry I just need to ask a few more questions, so I am not worried and I will definitely rate the answers thereafter.The reason I am worried about this, is that, a potentially business partnership prospect is now somehow refusing to do business with me because of this clause in the contract of previous employment? This could potentially cost me money. I am guessing its because the new business partners don't want this over their head. How can I give them comfort that this clause is not enforceable because, as you say it is so badly drafted? Is there any reference I can point them to? It is in essence, stopping me from trading at this moment in time!Also, its strange you say that my previous employer may not realise the clause is unenforceable, as they are solicitors themselves?!Thank you for your time so far.
Expert:  taratill replied 1 year ago.
the problem for the employer is the words 'could be'. There is no way a court would enforce a clause so widely drafted. Any business could branch out into any area. You just have to look at supermarkets as an example they now deal as banks/ travel agents and even give legal advice.
The situation is not governed by statute but by case law.
Case law dictates that badly (widely) drafted clauses are unenforceable. The principle being that if a clause 'is more widely drafted than necessary to protect a legitimate business interest' it is unenforceable. Clauses that have no geographical area are commonly unenforceable. It is ok to restrict you within a 30 mile radius as this may impact the business but restricting you from working at all is not ok.
I have no idea why your employer has used this clause. Maybe they are not employment law specialists?
You haven't said how the potential client has got wind of this clause, if the ex employer has told him then it may be time to send a solicitors letter to the employer to say you will take injunctive proceedings in the even they attempt to restrict you from working unfairly.
Hope that helps.
taratill and 3 other Employment Law Specialists are ready to help you
Customer: replied 1 year ago.
Thank you so much it helps.