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Alex J.
Alex J., Solicitor
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Experience:  Solicitors 2 years plus PQE
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, This relates to an issue with a non-compete clause,

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Hello,
This relates to an issue with a non-compete clause, and the background is quite lengthy so please bear with me.
- I worked as a salesperson for 18 months for a company in the online reputation management field, specifically in the section that sold a technology that assisted businesses with obtaining customer feedback (via tablets) at point of service. This service also included a cloud-based account service, where all these reviews are stored, reports can be ran etc. This portal can be accessed by both customers and the company staff internally.
- As part of my contract I had a non-compete clause which would run for 3 months following my final day with the company, less any time spent on gardening leave.
- During my tenure I was involved with pitching and running a trial of this service with a large, national chain, who trialed the system within 30 or so of their stores. This trial was overseen by their Head of eCommerce who, along with circa 40 others at their company, had full access to the cloud-based software.
- After a few months of this trial running, the Head of eCommerce (who I will now refer to as David) contacted me privately and informed me that he had spoken with one of his colleagues privately and they intended to create a similar software to ours, under a new company name (which I will now refer to as ABC Services). He wanted to know whether I wanted to come on board with the new company and offered me a lot of money to do so.
- I told him that his offer was tempting, but that I couldn't assist him with anything beyond what he already had, which was full access to my company's system via the trial. I continued working for my then current company and fully complied with their rules etc. throughout, though I did not inform them of David's intentions.
- After some time had passed, David informed me that he had submitted a proposal to his company from the ABC Services business that he had set up (under his partner's name). He also submitted the proposal that my company had made. Following this, he informed me that his company had decided to opt for ABC Services rather than the company where I worked, but would not be doing so for a number of months. In the meantime he asked me if I would work for ABC Services and train some sales staff for him.
- Feeling that the deal with my old company and all of the resulting commission and prestige had now been lost, I resigned at my old company and moved to ABC Services. This new company was not trading as at this stage it had no wares to sell (as it was still being developed), made no sales at all in my period there (approx 2.5 months), and we contacted no customers (or potential customers) of my old company. At no stage did I pass over any information that David himself could not have obtained simply through his access to my old company's platform during the trial.
- After working for ABC Services for that time, I became increasingly nervous about the whole situation and resigned. I am now working for an entirely different company.
- Now, after all this has happened, it seems that my old company have found out that I was involved to some extent with ABC Services (who they have only recently found out about). It also turns out that David has left the company where he was working (and which the two businesses were pitching to for the contract) and is now solely working for ABC Services. I have also found out that David's old company have actually NOT decided to go with the ABC Services proposition and are, in fact, still considering both proposals. My old company, therefore, is still in the running for the deal. In essence they have lost nothing.
- My old company have contacted me about a role that they believe I will be suitable for and want to see me in person this Thursday, but I am extremely worried that they have grounds to sue me, take me to court etc., over this whole debacle and that the purpose of this meeting will be to find out what I know with the aim being to file a case against me, i.e. that the job role enticement is smoke and mirrors.
Can somebody please advise me on whether this could be the case? Can I be sued by my old company and, if so, what would the potential ramifications be?
Thank you
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Did you any point personally benefit from ABCs use of the software?
What did your non compete clause say?
Kind regards
AJ
Customer: replied 2 years ago.

Hi AJ,

Just to clarify, ABC didn't 'use' any software - they were developing something similar to what my old company (let's call them Reputation1) were attempting to sell the company where Chris was Head of eCommerce (let's call them National Auto). While working for National Auto, Chris had full access to Reputation1's software and asked an acquaintance to develop something similar that he could then (under the guise of ABC Services) sell into National Auto, meaning that Reputation1 lost out.

I was only paid a basic wage by ABC when I briefly worked for them, and as there was nothing to sell, and Chris didn't pay me any kind of 'welcome' bonus etc., I didn't financially benefit from ABC.

I have pasted my non-compete clause below:

Restrictive Covenants:
13.1 Without prejudice to the other terms of this Agreement, you agree that following the termination of your employment for any reason whatsoever, you will be bound by and you will comply with the terms and conditions set out in Part 3.
13.2 Restriction Period: the period of 3 months following the date your employment terminates less any period of time spent by you on garden leave.

2. Obligations after employment
2.1 You shall not for the Restriction Period undertake any work or be in any way engaged, concerned or interested in any business or venture which:
(a) is or is about to be in competition with the Business or any part thereof; or
(b) is likely to result in the intentional or unintentional disclosure or use of Confidential Information by you in order for you to properly discharge your duties to or further your interest in that business or venture.
2.2 The provisions of clause 2.2 shall not operate so as to prevent you from being engaged, concerned or interested in any business or venture in so far as your work for that business or venture shall relate solely to services or activities with which your employment was not concerned to a material extent or in relation to which you were not responsible and in relation to which you held no Confidential Information during the Protected Period.
2.3 You shall not for the Restriction Period in respect of any Goods and/or Services:
(a) deal with or supply any Customer;
(b) deal with or supply any Prospective Customer; or
1536886-1
12
(c) offer employment or any contract for services to or employ or engage any Key Employee.
2.4 You shall not for the Restriction Period in respect of any Goods and/or Services:
(a) solicit, facilitate the solicitation of or canvass the custom or business of any Customer;
(b) solicit, facilitate the solicitation of or canvass the custom or business of any Prospective Customer; or
(c) solicit or entice or endeavour to solicit or entice any Key Employee to leave his employment with or cease his directorship or consultancy with the Company or any Group Company, whether or not that person would breach any obligations owed to the Company or any relevant Group Company by so doing.
2.5 You shall not for the Restriction Period:
(a) deal with or accept the supply of any goods or services from any Supplier where such supply is likely to be the detriment of any Group Company whether by causing the Supplier to reduce or alter the terms or quantity of supply to the Group Company or where the value of the Company’s arrangement with the Supplier is diminished; or
(b) solicit, facilitate the solicitation of or canvass the supply of any goods or services from any Supplier where such supply is likely to be the detriment of any Group Company whether by causing the Supplier to reduce or alter the terms or quantity of supply to the Group Company or where the value of the Group Company’s arrangement with the Supplier is diminished;
2.6 If, at any time during your employment, two or more Key Employees leave the employment of the Company or any Group Company to provide Goods and/or Services for the same business or venture, you shall not, at any time during the 6 months following the last date on which any of those Key Employees was employed by the Company or any Group Company, be employed or engaged in any way with that business or venture in respect of any Goods and/or Services.
2.7 You shall not at any time after the Termination Date:
(a) induce or seek to induce by any means involving the disclosure or use of Confidential Information any Customer or Supplier to cease dealing with the Company or any Group Company or to restrict or vary the terms upon which it deals with the relevant Group Company;
(b) be held out or represented by you or any other person as being in any way connected with or interested in the Company or any Group Company; or
(c) disclose to any person or make use of any Confidential Information (except as required by law).
3. General
3.1 You have given the undertakings in this Part 3 to the Company as trustee for itself and each Group Company in the business of which you have been concerned or involved to any material extent during your employment or which benefits from each undertaking. You agree that each such Group Company may enforce the benefit of each such undertaking. You shall at the request and expense of the Company enter into direct undertakings with any such Group Company which correspond to the undertakings in this Part 3.
3.2 You agree that if the Company transfers all or any part of its business to a third party ("transferee"), the restrictions contained in this Part 3 shall, with effect from the date of you becoming an employee of the transferee, apply to you as if references to the Company included the transferee and references to any Group Companies were construed accordingly and as if references to customers or suppliers were of the Company and/or the transferee and their respective Group Companies.
3.3 You agree that if you have material business dealings in other foreign jurisdictions on behalf of any Group Company, you will enter into undertakings providing the same level of protection for each such Group Company with such modifications (if any) as are necessary to render such undertakings enforceable in those jurisdictions.
1536886-1
13
3.4 You acknowledge that you have had the opportunity to take independent legal advice in relation to the undertakings contained in this Part 3.
3.5 The obligations imposed on you by this Part 3 extend to you acting not only on your own account but also on behalf of any other firm, company or other person and shall apply whether you act directly or indirectly.
3.6 You warrant that you believe the covenants contained within this Part 3 to be reasonable as between the parties and that you have no present intention of ever arguing that the restraints are unreasonable or otherwise unenforceable.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
It will take me a little while to review this. I will revert to you as soon as possible.
Kind regards
AJ
Customer: replied 2 years ago.

Hi, any estimate on how long that might be?

Thanks

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
I need to make some time to quietly read this and draft a response.
I will revert to you before 10.30am tomorrow? Is that ok or did you need assistance sooner?
Kind regards
AJ
Customer: replied 2 years ago.

I would ideally like some assistance sooner, but do you believe that anyone who wanted to deal with this request would also take until tomorrow to be able to provide me with some advice?

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
There is quite a long non compete clause - I just need to read it with some care and diligence and then write a written response with some practical guidance.
If you would like I can opt out for one of my colleagues who may be able to assist you soon, but I cannot speak for them for certain.
Please let me know and I will be happy to assist either way?
Kind regards
AJ
Customer: replied 2 years ago.

Hi,

I just really want to know what I'm dealing with, and as soon as possible, as this is causing me no end of stress and worry.

If you feel that you will be able to offer me advice as good as any of your colleagues (i.e. if this area of law is a specialty of yours) then I am happy for you to carry on

Thanks

Expert:  Alex J. replied 2 years ago.
Thank you very much.
To give you my initial opinion, I dont think you have much to worry about, but I need to cross reference it to this clause.
Essentially you committed a breach of confidence in your job, but did not benefit from it personally - so on my initial reading I think it would be unlikely that they would have any grounds to sue.
I need to review this clause however and I will revert to you asap.
Kind regards
AJ
Customer: replied 2 years ago.

Thank you AJ, I look forward to your full response tomorrow

Kind regards

Dean

Expert:  Alex J. replied 2 years ago.
Many thanks.
Kind regards
AJ
Expert:  Alex J. replied 2 years ago.
Thank you for your patience.
Unless your role to the original company was so integral and so sensitive that you would have brought the whole operation down by going to a competitior, I am not convinced that this restriction would even be enforceable. It is a blanket restriction on your ability to work in your field for 3 months. Post employment restrictions have to serve some valid commercial purpose to be enforceable and where they stop someone from carrying on their livelihood are very difficult to enforce.
Further more if they did actually want to enforce this clause, requesting you to come for a job interview under the guise that they might sue you is not an appropriate way to go about it, such conduct would be viewed dimly by a court. Ultimately you did not contact any of their clients, use any of their software or involve yourself in competing with them. I not sure they will be able to prove any breach. If you go to the interview it will be pretty obvious whether the questions are designed to catch you out, you simply dont tell them anything that suggests you were carrying out restricted activities during in the period of your contracted restriction. Also to make the matter more comfortable for you, have you considered whether they would conduct the interview over the phone - at least that way you can make some notes and highlight exactly what you need to avoid saying?
May I ask what aroused your suspicion that they might pursue you? They have not suffered any loss yet, so is it possible they are seeking your expertise to win this client?
Kind regards
AJ
Customer: replied 2 years ago.

Hi AJ,

Thanks for getting back to me, I appreciate your thoughts and advice on this matter.

Ultimately, the key sentence for me is "you did not... involve yourself in competing with them" which also happens to be the reason for why my suspicions were aroused as to them taking some form of action against me (whether that be to sue, or something else) - does my whole involvement with this new company not constitute competing with them, at least to some degree?

Thanks

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
It does to the extent that you were paid a salary - but that aside you (i) You did not actually do any work for them that you had done for the old company and (ii) you did nt poach any clients from the old co
I would also note that as this was a blanket restriction on you working, I think they would struggle to enforce the clause anyway.
When you went to work for ABC, what exactly did you do for them?
Kind regards
AJ
Customer: replied 2 years ago.

Essentially training a young girl on how to sell, how to find potential new customers (by searching sites such as TripAdvisor etc. for businesses with negative reviews), helping her improve her techniques over the phone, preparing presentations for the business to use in meetings, things such as that. I also accompanied David to a meeting with a company that he was looking to partner with (his goal was to ultimately use them to sell his software to their client base), and went to a meeting with a hotel in London who were interested enough in what the company might be able to offer to take a look at one of the tablets in person (though it never went beyond that meeting, as there was no fully operational software to sell)

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Was any of this work or similar in nature to the project you were previously undertaking with the old co?
You were training how to sell but not actually selling?
Have you had any indication from this company that they either knew you were working for ABC or were annoyed that you were working for ABC?
Kind regards
AJ
Customer: replied 2 years ago.

Well my role at Reputation1 was more geared towards demonstrating products to potential new customers and attending meetings if necessary, but they also wanted me to try and drum up business for them (which I never really undertook, and was one of the reasons behind me leaving). In a sense, the role at ABC was similar to a degree, in that it was sales of a similar product (even though there was no product to sell) - both used tablets on-site at a customer's location, and the purpose of both was to help a business improve its online review scores.

I know that Reputation1 are aware that I was involved, to some degree, with ABC as they found a test review that I had left on one of ABC's tablets online. This then prompted them to look into ABC, and they found out that Chris had left National Auto and gone to work as CEO of ABC

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Have R1 given you a job prospectus or this just an informal?
I would be suspicious if they had insisted on a formal interview out of the blue?
Do you actually want to go and work there?
Kind regards
AJ
Customer: replied 2 years ago.

Hi,

They haven't given me a formal job prospectus, no. I had a phone call from their Head of Sales (who I used to report to) on Wednesday, which involved him telling me that they had found out about ABC and Chris' involvement with them. He was very chatty, asked me how I was getting on, where I was working now etc. I told him that I was looking for a new opportunity (which is also true, as the place where I went to work after ABC is not all it was made out to be).

Crucially, during the phone call he did NOT mention that they knew that I (at least to some extent) had some involvement with ABC, even though I found out later on (through a friend I made at Reputation1 who still works there) that he absolutely was aware of it at the time of our call. So, of course, my suspicions were immediately aroused - why did he 'play dumb' and not mention that they knew that I had something to do with ABC?

He then called me again on Friday out of the blue, saying that he had been in his 1-2-1 with the UK CEO and they had happened to start discussing a new role which they believed I would be 'perfect for', and he recalled that I said I was looking for something new. He asked me if I was free on Thursday to come in to discuss it. Again, he didn't mention that they knew of my involvement with ABC.

In addition, I emailed him earlier today asking if the CEO still wanted to see me on Thursday "for an interview to discuss the position that you told me about last week"and at what time. He then sent me a calendar invite titled "Catch Up and Role Discussion" with the CEO CC'd in but with no other info, and also separately emailed me back a few hours later saying "Yeah Thursday at 2pm if that works"

All very suspicious, right? This is why I am very worried that this is all an ambush.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
All I can suggest is if they "ambush you", just end the meeting. You dont have to tell them about any projects you have been involved in.
This is not the way to start making a claim against some one. If they have an issue with you they need to set it out writing.
If they start going on about the Non Compete - then you can just say you have been advised that it would be very difficult to enforce as it fundamentally restricts your ability to work. In any event you have at no time worked in competition with the company. Say to them if they want to make any allegations they must do so in writing.
I look forward to hearing from you.
Kind regards
AJ
Alex J., Solicitor
Category: Law
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Experience: Solicitors 2 years plus PQE
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