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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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, In my previous employment contract, as a digital Headhunter

Resolved Question:

Hi,
In my previous employment contract, as a digital Headhunter working on permanent assignments, which was signed when I was in a managing consultant, it says that I am unable to work for a competitor for 6 months following the end of my employment. My previous manager has highlighted that this covers all recruitment/executive search companies.
Now I am looking to join a business that specialises in digital search only 2 months after leaving, which I appreciate is competing with my old company, however my focus will be on interim assignments.
My understanding is that 6 months is too long and could be argued that it is anti competitive, also if I am working on interim roles, which my previous company did not do at all, then it does not directly compete. As long as I avoid engaging with any clients and candidates that I did when working for my previous company, will the clause still stand?
Also, what are the possible consequences if they did decide to proceed?
Thanks,
Richard
Submitted: 2 years ago.
Category: Law
Expert:  Ben Jones replied 2 years ago.
Ben Jones :

Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Whilst you say certain aspects will not directly compete how could it affect their business?

Customer:

Hi. Well I have a network of digital people that i built up in my previous employment that could be beneficial in my new role, however I can be careful not to contact anyone for the remaiing 4 months that the new employer does not already have on their system

Customer:

And I am hoping that if I am working on purely interim assignments,which my previous business didn't (only permanent roles), it might be ok. as I will notbe directly taking any business away from them. However, I am concious that my new business does manage permanent assignments so wonder whether that would still be an issue. evenif im not involved...

Ben Jones :

Post-termination restrictive 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.

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. 6 moths is not necessarily unreasonable – some restrictions can last for longer than that even but your main argument would be to try and show that you are not actually competing directly with their business. You are unlikely to be prevented from joining a business that directly competes with your ex-employer’s as long as the work you are involved in does not compete with it.

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 clarifies your position? If you could please quickly let me know that would be great, as it is important for us to keep track of customer satisfaction. Thank you

Customer:

Thanks Ben. Just briefly, in your view, if I didn't contact any candidates that weren't already on my new companies system, or contact any clients that my old firm worked with, or in any way do anything to damage their reputation, they can't uphold it?

Customer:

Also if I focus on interim placements, they don't offer that service so I presume there's no way of them demonstrating i've stolen business or caused loss of earning..

Ben Jones :

From what you say the odds are in your favour – you are not using your influence over customers/clients or actively taking away the employers business so these restrictions could be rather difficult to enforce here

Ben Jones :

Does this clarify things for you a bit more?

Customer:

Yes thanks Ben,

Customer:

appreciate the help. Let meknow when I can give you feedback

Ben Jones :

hi you are welcome and you should be able to leave feedback now, many thanks and all the best

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