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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 48474
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Can a UK employment contract restrict a person from working

Customer Question

Can a UK employment contract restrict a person from working for a companies competitor either as an employee or contractor through his own company?
Submitted: 1 year ago.
Category: Employment Law
Expert:  Ben Jones replied 1 year ago.

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today.

Expert:  Ben Jones replied 1 year ago.

Is there a specific terms attached to the restriction?

Expert:  Ben Jones replied 1 year ago.

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:

{C}· Goodwill (including supplier and customer connections)

{C}· Trade secrets and confidential information

{C}· 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:

Non-competition covenants, such as the one in your case, 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.

This is your basic legal position. I have more detailed advice for you in terms of the options an employer has to enforce such restrictions, which I wish to discuss so please take a second to leave a positive rating for the service so far (by selecting 3, 4 or 5 stars) and I can continue with that and answer any further questions you may have. Don’t worry, there is no extra cost and leaving a rating will not close the question and we can continue this discussion. Thank you

Ben Jones and other Employment Law Specialists are ready to help you
Customer: replied 1 year ago.
I would only be taking my technical nowledge of the software application domain. No code or specifications. The advantage to the new company would be that they could develope a similar software feature much faster with my help. Does that clarify the situation?
Expert:  Ben Jones replied 1 year ago.

Thank you. The knowledge that you have can affect your ability to work for someone else or to move to a competitor if it is detailed enough knowledge to affect the business and it was something which you had learned whilst working for them. Whilst they cannot prevent you from working for a competitor indefinitely, they could potentially impose a reasonable period, ay 3-6 months from termination.

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:

{C}· Obtain an interim injunction preventing the employee from doing certain things that would make them in breach of the restrictive covenant

{C}· 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.

Customer: replied 1 year ago.
If no such Covent exists would I have a problem?
I am on holiday at the moment and believe my current contract does not have such a Covent. But on my return my current company wants to change my contract. Probably because a colleague has just moved to a competitor.
Expert:  Ben Jones replied 1 year ago.

If there is no such covenant then you can do as you please. If they try and change your contract you do not have to accept the changes and can leave immediately having rejected the changes and not be bound by them

Customer: replied 1 year ago.
Thank you the detailed information.
Expert:  Ben Jones replied 1 year ago.

You are welcome