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Jenny
Jenny, Solicitor
Category: Law
Satisfied Customers: 6307
Experience:  Qualified Solicitor specialising in Employment Law and general legal matters. Please start your question For Jenny Only
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I Have the following in my past employment contract (I resigned

Customer Question

I Have the following in my past employment contract (I resigned last month), and I wish to start a new business with an ex colleague who resigned from there last month to look for another job but has now decided to start with me.
"They will restrict you for 3 months after your employment has terminated , from directly or indirectly soliciting customers whom you had personal dealings
,or employing or solicitating employees with whom you have personally been in the habit of dealing with in the course of your duties in the preceeding 12 months, for a period of 6 months following the termination date"
We will be both directors of this new company, so technically not an employee..?
Will the above clause cause us any problems?
Submitted: 2 years ago.
Category: Law
Expert:  Jenny replied 2 years ago.
Customer:

Hello my name is ***** ***** I am happy to help you today. Is your ex employer likely to suffer a financial loss if you do this?

JACUSTOMER-idqtye74- :

Hello, no, don't believe so. the ex employee and myself have now officially stopped working there. Although we are doing similar work as they do.

Customer:

Ok so they are not likely to lose orders or customers as a result of this? Are you setting up a business that will be in competition?

JACUSTOMER-idqtye74- :

no i dont believe so ..
Not direct competition, they concentrate on one thing and do other smaller things, and we are doing the smaller things.. we are almost a business that helps them get business in a way... They are a very large company

JACUSTOMER-idqtye74- :

They are a server hosting company which also does management of the servers for a fee... we are a server managment company

Customer:

Ok the key point here is that on general legal principles restrictive covenants are only enforceable insofar as they are necessary to protect a legitimate business interest, potentailly if you are setting up to compete with part of the business the ex employer could argue that this is met. The clause does not say that you must be employees of the new business and the fact that you will be directors does not detract from that as the clause is widely enough drafted to cover this.

Customer:

The good news though is that it costs tens of thousand pounds to enforce such restriction and if they are not likely to suffer a loss they are unlikely to take action as it will not be economic to do so.

Customer:

To be completely safe it is best to wait until 3 months after your employment to engage in these activities.

Customer:

If you have any further questions about this please do ask.

JACUSTOMER-idqtye74- :

yeah ok that makes sense - it would be no problem for the other person to be a shareholder thou I presume?

Customer:

No. Unless the clause specifically prevents shareholding but it does not appear to .

JACUSTOMER-idqtye74- :

ok . thanks for your help on this!

Customer:

No problem please remember to rate my answer and do come back to me in the future if you need to , and good luck with your new business venture!

Jenny and 3 other Law Specialists are ready to help you
Customer: replied 2 years ago.

Quick follow up question... Does it matter where the company is registered ? I.e would it make a difference if it was in uk or Ireland r example ?

Expert:  Jenny replied 2 years ago.
Hi not really, it is whether it is competing with the ex employer that is key.