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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 46798
Experience:  Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
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I have recently left employment with one company and started

Customer Question

I have recently left employment with one company and started with a competitor.My restrictive covenants state the following: you may not knowingly canvas or approach for orders for services similar to those provided by the company any organisation which is at the time or has been in the previous 2 years a client.I have a number of customers who have asked to see me in my new role. As they have approached me and not vice versa, does this get around the above restriction? And then what happens if they choose to transact business via my new company?thanks,
Julian
Submitted: 7 months ago.
Category: Employment Law
Expert:  Ben Jones replied 7 months ago.

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

Expert:  Ben Jones replied 7 months ago.

Please can I just clarify whether covenant is within your previous employment contract? If so, how long ago did you leave exactly?

Customer: replied 7 months ago.
my previous contract, I only left on 23 September 2016.
Expert:  Ben Jones replied 7 months ago.

OK, thank you for your response. I will review the relevant information and laws and will get back to you at the earliest opportunity. There is no need to wait here as you will receive an email when I have responded. Also, please do not responded to this message as it will just push your question to the back of the queue and you may experience unnecessary delays. Thank you.

Expert:  Ben Jones replied 7 months ago.

Apologies for not getting back to you sooner, I experienced some temporary connection issues and could not get back on the site until now. All appears to be resolved now so I can continue dealing with your query.

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.

Non-solicitation covenants, such as the one here, 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 (including canvassing and approaching as described here) 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.

So if you did nothing to entice them away, they voluntarily approached you first and decided to work with you, then that is their choice and you are unlikely to have done anything wrong in the circumstances or breached the covenant.

This is your basic legal position. I have more detailed advice for you in terms of the options the employer has for taking this further if they wanted to, 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, UK Lawyer
Category: Employment Law
Satisfied Customers: 46798
Experience: Qualified Employment Solicitor - Please start your question with 'For Ben Jones'
Ben Jones and other Employment Law Specialists are ready to help you
Expert:  Ben Jones replied 7 months ago.

Thank you. As mentioned, 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

However, in these circumstances if it was indeed the clients who had approached you and decided for themselves that they wanted to work with the new employer, then it is unlikely that this would be considered solicitation and in reach of the restrictions.

Customer: replied 7 months ago.
Thanks Ben, just one final question in relation to this, given the wording states 'clients', I'm assuming this doesn't apply to prospects i.e. Clients that may have been on the radar, but were not doing business with my previous company?
Expert:  Ben Jones replied 7 months ago.

Clients would be considered to include only parties with which the company was already doing business - a lead is not a client in that sense so they would not be covered

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