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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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Thank you for your advice last week. Having advised my employers

Customer Question

Thank you for your advice last week.

Having advised my employers that I will not sign a retrospective restrictive covenant, they have today advised that they feel there is a "non-compete" clause that would prohibit me from working with an organisation that they deem as a competitor.

I have attached the full contract

The clause is copied below....

Please can you confirm your views on this and if it is enforceable (is it reasonable) or unduly and unreasonable restrictive).


Please can you advise a) how to respond; and b) what I should do next.

My notice period is due to end on 28th March (having given notice verbally on 28th Feb and in writing on 3rd March)


RESTRICTIVE COVENANTS

1.1 For the purposes of clause 15:

“Customer” means any person, firm, company or organisation who or which at any time during the period of 36 months immediately preceding the Termination Date was a customer or a supplier of the Company in relation to the Restricted Products or Restricted Services or who or which at the Termination Date was negotiating with or contemplating doing business with the Company in relation to the Restricted Products or Restricted Services and with whom or which, at any time during such period, you have had personal dealings in the course of your employment;

“Capacity” means personally or as agent, consultant, director, employee, owner, partner or shareholder, or for or on behalf of any other person, firm, company, or organisation, directly or indirectly, or in any other capacity;

“Prohibited Area” means the United Kingdom;

“Restricted Person” means anyone employed or engaged, or previously employed or engaged, by the Company at the level of Business Development Manager or above, or who could materially damage the interests of the Company if they were involved in any Capacity in any business concern which competes with any Restricted Service or Restricted Product, and whom you dealt at any time during the 36 months prior to the Termination Date;

“Restricted Products” means all and any product manufactured, marketed, distributed, sold or supplied by the Company at any time during the 36 months prior to the Termination Date;

“Restricted Services” means all and any services of a kind provided by the Company at any time during the 36 months prior to the Termination Date;

“Termination Date” means the date upon which you ceased to be employed by the Company.

1.2 You hereby undertake with the Company that at any time during the continuance of your employment by the Company and for a period of 6 months after the Termination Date, and whether the termination of your employment was in breach of contract or otherwise, you will not without the prior written consent of the Company (which consent shall not be unreasonably withheld) in any Capacity:

1.2.1 in the Prohibited Area carry on be engaged or interested in any activity or business which is or shall be wholly or partly similar to or in competition with the business of the Company as at the Termination Date;

1.2.2 in the Prohibited Area be employed or engaged by any person, firm, company or organisation which requires or might reasonably be thought by the Company to require you to disclose or make use of any confidential business information of the Company in order properly to discharge your duties to or to further your interest in such person, firm, company or organisation;

1.2.3 in the Prohibited Area in competition with the Company be employed or engaged or otherwise interested in the business of manufacturing, selling, distributing or otherwise dealing with the Restricted Products or the business of providing the Restricted Services;

1.2.4 in competition with the Company solicit or entice away from or endeavour to solicit or entice away from the Company any Customer in the Prohibited Area;

1.2.5 in competition with the Company solicit business from or canvass or approach for business purposes any Customer in the Prohibited Area;

1.2.6 in competition with the Company accept orders for supply of any Restricted Products or Restricted Services from any Customer in the Prohibited Area;

1.2.7 seek to employ or engage or enter into business with any Restricted Person for the purpose of procuring the commission of acts which, if done by you would be in breach of this clause 15.2;

1.2.8 solicit or entice away from or endeavour to solicit or entice away from the Company any Restricted Person whether or not such person would commit any breach of his or her contract of employment by reason of leaving the employment of the Company.

1.3 You hereby undertake with the Company that you will not at any time after the Termination Date in the course of carrying on any trade or business claim, represent or otherwise indicate any present association with the Company.

1.4 While the restrictions
Submitted: 2 years ago.
Category: Law
Expert:  UKSolicitorJA replied 2 years ago.
Thank you.

Courts do not like enforcing such restrictive covenants and interpret them very narrowly. The courts will only uphold such covenants if they protect a legitimate business interest of your current employer.

You cannot be stopped from working for a competitor as that it a restraint of trade and you cannot be expected to sit at home for 6 months and not earn a living.

Also, I note that the whole of the UK is a prohibited area which certainly seems to be unreasonable unless your company trades UK wide and you were involved with UK wide products and clients.

The tests that a court will use are that the covenants must be reasonable, necessary to protect the legitimate business interest and of a reasonable duration.

Unless your current employer can justify all of the above, I would think the restrictions are unreasonable and unenforceable.

The final decision will obviously lie with the courts.
You may read further on the subject here

http://www.lindermyers.co.uk/are-restrictive-covenants-enforceable_751.html

Hope this helps
Customer: replied 2 years ago.

Thank you for the prompt response.


 


The business operates globally (with offices in Manchester, London, New York, Dusseldorf, Amsterdam, Copenhagen).


 


My clients are based all over the UK and in Europe.


 


The new company is also global or at least works with global companies, with a significant number operating in Europe.....So I can see that the geographic area could be considered reasonable.


 


As you say - 6 months is a long time - and I only have a 4 week notice period.


 


There is nothing that I remember seeing that references Garden leave (or paid leave) to offer any sort of alternative to unemployment.


 


 


Where do I go from here....should I ask them to identify the clauses that they are invoking and/or to explain or justify their concerns?


 


Or should I simply say that the restrictions are an unreasonable restraint of trade and that I shall be leaving on the 28th anyway (and expect solicitors letters etc) post departure.


 


Do I have any onus or responsibility to advise my new employer - now or before I start?


 


Please advise how to best deal with this conflict.


 


Many thanks

Expert:  UKSolicitorJA replied 2 years ago.
It is better to try and see if your employer is willing to waive the covenants if possible so that you do not need to inform your new employer.

Otherwise it would be advisable to inform your new employer if the current employer does not agree to waving them.

You also have the option to ignore the covenants and simply start working with the new employer, perhaps your employer may not do anything. They could claim breach of contract against you in the courts or tribunal in which event it would be up to the judge to decide whether or not to enforce the covenants.

You may wish to approach your employer and ask them to justify their concerns and see if you can agree on something which works for both of you.

Hope this helps

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