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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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Experience:  Qualified Solicitor - Please start your question with 'For Ben Jones'
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Hi, I am looking to leave my current employer along with

Resolved Question:

Hi,

I am looking to leave my current employer along with one of our engineers as we are looking to start up our own business. Our employer made us sign a confidentiality agreement when we joined and we are wondering if its possible someone could look at it and advise what we can and cant do
Submitted: 3 years ago.
Category: Law
Expert:  Alice H replied 3 years ago.

Alex Hughes :

My name isXXXXX and I'm happy to help with your question today.

Alex Hughes :

You can attach the PDF to your response or send it [email protected] marked for my personal attention. I will have a look and respond within 24 hours.

Alex Hughes :

I can see paragraphs 1 - 5 but nothing more.

Alex Hughes :

Is there any more?

Customer:

am trying to attach page 2 which is the relevant but it doesn't seem to be working properly can you confirm receipt

Alex Hughes :

I have received the first page (paras 1 - 5) but not the second.

Customer:

Alex,

Customer:

i have sent it by e-mail

Alex Hughes :

Thanks. I will have a look at the document as soon as it arrives.

Customer:

Hi Alex,

Customer:

still awaiting an answer, have been asked to rate your service but can't comment until i get an answer really.

Alex Hughes :

Hi! No need to rate until you have a answer! I am still waiting for your email. will chase up customer serviceservices' 'inbox' and come back to you this evening.

Customer:

Attachment: 2014-04-03_165800_img_20140331_0002_new_page_2.pdf

Full Size Image
Hi Alex, Just tried again and its attached page 2. hopefully that will give you all the details to make an informed decision. regards Ian

Expert:  Alice H replied 3 years ago.
Hello Ian. Many thanks - I am looking at it now.
Expert:  Alice H replied 3 years ago.
Ian, I've looked at the document which appears to be written in plain English as to the 'do's' anf 'don'ts'. Is there something you want me to look at particulary or something that is concerning you? Alex
Customer: replied 3 years ago.

Hi, if two of us leave and start up on our own are we in breach of clause 2 and what action could he take. After we leave during the 4 weeks mentioned in 3 would we be able to for example , start up the company and sign leases on buildings and fit them out, or websites/vans etc. is point 4 enforcable ,we wouldn't particularly attempt to solicit their customers but what if their customers heard we were leaving and came to us.

Expert:  Ben Jones replied 3 years ago.
Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today. Just a question when did you sign the agreement
Customer: replied 3 years ago.

my agreement was signed 7 years ago and my colleagues was about 6 years ago

Expert:  Ben Jones replied 3 years ago.
Thank you. The agreement is a typical restrictive covenant which seeks to restrict your activities both during and after your employment with the company.

Such 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:
• Goodwill (including supplier and customer connections)
• Trade secrets and confidential information
• 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. The covenants you are concerned about would generally be the following:

1. Non-solicitation covenants - they 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 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.

2. Non-dealing covenants are a wider restriction and not only restrict solicitation but any other general contact with clients. The enforceability of a non-dealing covenant will depend on the interest being protected and can be influenced by a substantial personal connection the employee enjoys with a specific client. However, such a covenant will not be enforceable if it prevents any sort of contact with the client. The restriction must be focused on the specific type of contact that would directly affect the employer's business. So it would try and cover situations where the client is the one that approaches you first as you would not have solicited them but that would be difficult to enforce.

3. Non-competition covenants 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.

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:
• Obtain an interim injunction preventing the employee from doing certain things that would make them in breach of the restrictive covenant
• 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.

I hope this has answered your query. Please take a second to leave a positive rating, or if you need me to clarify anything before you go - please get back to me and I will assist further as best as I can. Thank you and feel free to bookmark my profile for future help:


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Customer: replied 3 years ago.

thanks Ben


. From your answer then we should be okay to start the business and fit out premesis. I also assume we could start calling on businesses that have nothing to do with out current employer. In your opinion though we would be better to stay away from any of our current employers customers for the time period of the restrictive covenant.


 


Am I understanding your answer correctly?


Regards


Ian Lawley

Expert:  Ben Jones replied 3 years ago.
Hello Ian, yes this is more or less correct. Working in competition in itself is not likely to be an enforceable restriction unless you go out of your way to try and impact their business through using confidential information, trade secrets, steal their clients and so on. So you can approach those people/companies that were not their past or recent clients - this is just the way business works and it is not illegal, but if you can, try to avoid restricted clients for the duration of the covenant.

If your original question has been answered I would be grateful if you could please quickly rate my answer - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 47887
Experience: Qualified Solicitor - Please start your question with 'For Ben Jones'
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