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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
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In my employment contact I have the following clause: 10.2

Resolved Question:

Hi,
In my employment contact I have the following clause:
10.2 In order to protect the Confidential Information to which the Employee has access as a
result of the Employment, the Employee covenants with CACI (for itself and as trustee and
agent for each Group Company) to not:
(a) For twelve months after Termination, solicit or endeavour to entice away from CACI
or any Group Company the business or custom of a Restricted Customer with a view
to providing Products or Services to that Restricted Customer.
(b) For twelve months after Termination, offer to employ or engage or otherwise
endeavour to entice away from CACI or any Group Company any Restricted Person.
(c) For twelve months after Termination, directly or indirectly assist a third party from
approaching, soliciting or offering employment to any Restricted Person.
(d) For six months after Termination, be involved in any capacity with any Restricted
Customer.
(e) For twelve months after Termination, be involved with providing Products or
Services to or otherwise have any business dealings with any Restricted Customer.
(f) For six months prior to Termination not to take preparatory steps to set-up business
or assist a business concern which is intended to be, wholly or partially, in
competition with the Restricted Business.
(g) Use in connection with any business any name which includes the name of CACI or
any similar name.
(h) At any time after Termination, represent him/herself as connected with CACI or any
Group Company in any Capacity.
I am intending to leave to a customer, and the COO has informed me he intends to enforce the convenant, not to protect confidential information, but instead to deter people leaving in a similar fashion.
How enforceable is the covenant?
Submitted: 1 month ago.
Category: Employment Law
Expert:  Ben Jones replied 1 month ago.

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

Expert:  Ben Jones replied 1 month ago.

How would the employer be affected if you went to work for a competitor?

Customer: replied 1 month ago.
My employer contracts software development effort on time and materials basis - One of those companies it contracts to is the company that wants to hire me, so they are a customer not a competitor.Their reasoning for enforcing is that they don't want to loose other people under similar circumstances - their afraid if they let one person go it will set a precedent (although I wouldn't be the first).I'm not sure what claim they would make as I'm not particularly high up in the company, I have no confidential knowledge.Cheers,
Dan Udell
Expert:  Ben Jones replied 1 month ago.

Thank you. It is a rather common occurrence for employment contracts to contain post-termination restrictive covenants. An employer would understandable want to protect their business from a departing employee's knowledge of confidential information, business connections, influence over clients, suppliers, staff, etc. However, a covenant that restricts an employee's post-termination activities will be automatically unenforceable by 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.

The first thing to consider is what legitimate business interests (LBIs) can the employer try and protect? The most common ones are:

· Goodwill (trade connections with customers and suppliers)

· Trade secrets and confidential information

· Stability of the workforce (preventing poaching of employees)

If they are trying to protect an LBI, any relevant restriction must be drafted no wider than is reasonably necessary to protect that interest. Generally, the courts would try and balance the interests of the employer's business and the employee’s right to freedom of movement and to earn a living.

Non-competition covenants - prevent an employee from working with a competing business or setting up to work in competition with their ex-employer. A covenant simply wishing to prevent competition will not be enforceable. However, a non-competition covenant trying to protect an LBI can be. Such covenants will generally only be 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. If these covenants include a geographical area, their enforceability will also depend on the area they are trying to cover, such as density and population and what is considered reasonable in the circumstances.

So whilst restrictive covenants are often used as a scare tactic by employers, in reality they can be difficult to enforce and just because they want to put off others from leaving, if LBIs as above are not seriously affected, it is unlikely a court would deem them enforceable.

I trust this has answered your query. Please take a second to leave a positive rating by selecting 3, 4 or 5 stars above - this is an important part of our process and recognises the time I have spent assisting you. If you still need me to clarify anything else, please reply on here and I will assist as best as I can. Thank you

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