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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 44402
Experience:  Qualified Solicitor - Please start your question with 'For Ben Jones'
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Compromise agreement and breach

Resolved Question:

Hi. I've been offered a 6 month contract with a very large organisation, in one of its subsidiaries. I left the very large organisation 18 months ago under compromise and the agreement that I wouldn't work for 24 months as an "employee, contractor or howsoever arising"
I would be employed by an agency on a PAYE basis so tecynically would not be an employee or contractor. But this would fall under "howsoever arising". Or would it? Is it safe to take this contract? I know of others who have rejoined this organisation under the exact same circumstances so there is precedent.
Can they uphold this?
Submitted: 1 year ago.
Category: Law
Expert:  Ben Jones replied 1 year ago.
Ben Jones :

Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Do you mean that the restriction is trying to prevent you from taking up any sort of employment for the 24 months after you left their employment?

Customer: Yes I think so. Trouble is it's huge organisation that specialises in a certain industry (as do I) and it owns most of the orgabisations I coukd work in with my expertise. So in effect they would be blocking me from working in this industry for 24 months...
Ben Jones :

Such a restriction is highly unlikely to be enforceable – it is way too restrictive. As far as the law stands, 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. So you can only realistically be prevented from working for another competitor for example if you are going to use a specific influence in the industry to drive business away from the old employer or to poach clients or staff. Also if you were to use confidential information from the old employer or trade secrets that could also be restricted. However, a general restriction on working in the industry is way too restrictive and I do not see any court allowing it to be enforced.

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. In this case they are very slim.

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: Thank you for this. It's extemely comprehensive. The 3 points you raise re workforce stability etc do not apply to
Customer: me. I was told when I signed this agreement that it was to stop the revolving door syndrome of people leaving with wads of cash and returning a month later into a new role. Does that sound right? Also just to be clear, the organisation is not stopping me working in the industry. I can work for competitors BUT it does own most feasible organisations that I could work within. Also this was 18 months abo
Customer: I need to work but feel nervous about it :(
Ben Jones :

the law wants people to work, it needs that - restrictions that stop people from doing that are rarely fair and enforceable. Only when you are likely to affect the old employer's LBIs and it is reasonably required to prevent that for a limited period (usually 6 months, max 2 years) can restrictions be enforceable. The period here appears too long and the restrictions in general are draconian, way too restrictive to be enforceable

Customer: Excellent and reassuring advice, thank you!
Ben Jones : You are welcome all the best
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 44402
Experience: Qualified Solicitor - Please start your question with 'For Ben Jones'
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