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Alex J.
Alex J., Solicitor
Category: Law
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Experience:  Solicitors 2 years plus PQE
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I have a question on a restrictive covenent clause. I work

Customer Question

I have a question on a restrictive covenent clause. I work in the financial industry and i have a non solicitation and non dealing clause of 12 months- in which I am trying to argue is unenforceable in the financial market. An ex client has stated he wishes to follow me to the new employer, no solicitation from myself. Can i accept this client- can the new company accept this client if I have no dealing with him? They have already stated that they wish to follow me and have terminated their business arrangement with the previous firm. Thanks
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your question and welcome to Just Answer.

Can you recite to me exactly what the clause says?

Kind regards

AJ
Customer: replied 3 years ago.

Please see below.



  1. Restrictive Covenants:


 


1.1 You will not for a period of twelve (12) months from the date your employment terminates, either on your own behalf or on behalf of any person, firm or company in relation to the business activities of the Company in which you have been engaged or involved directly or indirectly during the twelve (12) months prior to the date your employment terminates:


 


(a) Solicit, approach or offer goods or services to or entice away from the Company any person, firm or company who was a client or customer or was a prospective client or customer of the Company with whom you or any person reporting directly to you has been actively engaged or involved by virtue of the duties carried out by you under this contract; or


 


(b) Deal with or contract with any person, firm or company who was a client or customer or was a prospective client or customer of the Company with whom you or any person reporting directly to you has been actively engaged or involved by virtue of the duties carried out by you under this statement.


 

Customer: replied 3 years ago.
Relist: Other.
no answer at all
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your response.

You have to bare in mind any answer I give you relating to the enforceability of this covenant is caveated by the fact that it is your former employer's prerogative whether they wish to enforce it or not. If it comes to a dispute your former employer will either take you to court or it wont, and accordingly it will be for the court to decide the enforceability.

On the face of it this clause seems enforceable. However I would note the following:
- In any industry 12 months is too long unless you are a senior employee or the information you deal with is exceptionally commercially sensitive;
- Not soliciting or approaching is protecting a commercial interest, however it could be argued that "not providing services to" amounts to just a restraint on trade.

For those reasons I would say it is unenforceable.

The safest way to protect your self is to have the client write to your former employer and say that he wishes to follow you as his own preference. The client should also say that he will not stay with your old employer regardless as you are not there anymore. That way your employer wont be able to claim any actual loss as the client would have left anyway. Then it also cannot be argued that you in anyway solicited this client.

I look forward to hearing from you.

Kind regards

AJ



Customer: replied 3 years ago.


does the "non dealing" element still restrict me/my new company- even if the client is willing?

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

It does potentially but it depends what the commercial justification of the clause is.

It seems to me like it is nothing more than an unfair restraint on trade.

Is there a commercial justification for this? Did you receive any remuneration for leaving?

Kind regards

AJ
Customer: replied 3 years ago.

we received no finanical gain for leaving at all - currently on 3 month notice period- and commercially we will not be directly competing with them as there are hundreds of companies doing exactly what we do.There are also many employees who can do what we do, just differently and they have already replaced us with a new employee if that makes a difference

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Did you leave of your own accord?

Kind regards

AJ
Customer: replied 3 years ago.


Yes

Customer: replied 3 years ago.


yes we left of our own accord

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

If you have not actually left yet, the best thing would be to send that customer to the new employer already.

Then it would be an existing customer of that company and therefore they would not be able to put the non dealing restraint on you.

Kind regards

AJ
Alex J., Solicitor
Category: Law
Satisfied Customers: 3493
Experience: Solicitors 2 years plus PQE
Alex J. and other Law Specialists are ready to help you
Expert:  Alex J. replied 3 years ago.
Hi

Thank you.

Please note in relation to the above you still cannot act in dereliction of your employment contract while notice is being served.

You must ensure that it is your new employer who approaches this customer before you leave.

Kind regards

AJ

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