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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 48167
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I have a restrictive covenant in my employment contract which basically states I can'

Resolved Question:

I have a restrictive covenant in my employment contract which basically states I can't work for a local competitor for 6 months.
First of all, is this legal? Secondly, two parts if the contract haven't been fulfilled by the employer so I wondered if this invalidates any restrictive covenants?
Submitted: 2 years ago.
Category: Law
Expert:  Ben Jones replied 2 years ago.
Hello, my name is ***** ***** it is my pleasure to assist you with your question today. What parts of the contract have not been fulfilled by the employer?
Customer: replied 2 years ago.

My contract states there is a company pension which is available to join - when I asked about this it turns out there isn't one set up.

The contract also states I'll be reimbursed for fuel if I use my own car for company business but this hasn't happened either.

Expert:  Ben Jones replied 2 years ago.
OK thank you, ***** ***** it with me. I am in a tribunal today so will prepare my advice during the day and get back to you this afternoon. There is no need to wait and you will receive an email when I have responded. Thank you
Expert:  Ben Jones replied 2 years ago.
Thanks for your patience. 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, such as the one you are under, 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.
Finally, the point you made on the employer not having followed parts of the contract. Potentially this could make the whole contract void but it would need to be a serious breach, something which goes to the root of the contract. So for example, failure to pay you or other serious breaches. In any event, only a court can decide if that is the case and if you can rely on that as a reason not to be bound by the covenants so it is not going to be a certainty unless it is taken to court.
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
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