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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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Experience:  Qualified Solicitor - Please start your question with 'For Ben Jones'
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I am looking to serve notice in my current role where

Resolved Question:

Hi,
I am looking to serve notice in my current role where I have been here for nearly 7 years as an employee. I want to start-up my own company with other colleagues therefore will be a director/shareholder. My contract is under by old company name however we were acquired last year and even though the new company owns the rights i wasnt given a new employment contract.
Looking at the below clause(s), at what point in time can i approach existing customers and is it better for me to be an employee of the new company for 6 months and then be a shareholder/director or doesnt it matter.
Thanks
15.2. The Employee covenants with the Company that he/she will not, save with the prior
written consent of the Company, directly or indirectly, either alone or with, or on
behalf of any person, firm, company or entity and whether on his/her own account
or as principal, partner, shareholder, director, employee, consultant or in any
capacity whatsoever:-
15.2.1. for six months following the Termination Date and in competition with the
Company or any Group Company canvass or solicit business or custom from
any Client or Prospective Client in relation to Services;
15.2.2. for six months following the Termination Date and in competition with the
Company or any Group Company be concerned with the supply to any Client
or Prospective Client of Services or otherwise deal with any Client or
Prospective Client in relation to Services;
15.2.3. for six months following the Termination Date solicit or endeavour to solicit
the employment or engagement of any Key Employee in a business supplying
Services (whether or not such person would breach their contract of
employment or engagement);
15.2.4. for six months following the Termination Date employ any Key Employee in
a business supplying Services (whether or not such person would breach their
contract of employment or engagement;
15.2.5. at any time after the Termination Date represent himself/herself as being in
any way connected with (other than as a former employee) or interested in the
business of the Company or any Group Company or use any registered names
or trading names associated with the Company or any Group Company
Submitted: 1 year ago.
Category: Law
Expert:  Ben Jones replied 1 year ago.
Hello, my name is***** am a solicitor on this site and it is my pleasure to assist you with your question today.
According to the clauses you have a specific restriction for a period of 6 months after termination not to approach any existing customers/clients. This period is not necessarily unreasonable and it is a common duration for a restriction. Whether you become an employee or shareholder/director would not make much of a difference because you would still be involved in the business and it would still have an effect on your existing employer.
In terms of whether these restrictions can be enforceable, that depends on a number of factors. Generally, 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-solicitation covenants are there to prevent an employee from enticing away the customers of their ex-employer and as long as they are reasonable are the most commonly enforced type of restriction. Solicitation generally means “directly or indirectly requesting, persuading or encouraging clients of the former employer to transfer their business to their new employer". To be valid, the covenant should be restricted to customers with whom the employee had contact during a specified period before leaving. Other relevant factors may include the employee's level of seniority in the business, the extent of their role in securing new business and the length of similar restrictions in the employment contracts of competitors.
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 trust this has answered your query. I would be grateful if you could please take a second to leave a positive rating (selecting 3, 4 or 5 starts at the top of the page). If for any reason you are unhappy with my response or if you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
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