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Ben Jones
Ben Jones, UK Lawyer
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Three months ago I left my job at company X to launch my own

Resolved Question:

Good afternoon.
Three months ago I left my job at company X to launch my own project.
Recently a former colleague of mine (John) expressed the desire of being co-owner of my Ltd company, I am happy to appoint John as a Director and share equally with him the ownership of the company.
Company X is now telling John that he cannot join me as co-owner of the company because in my previous contract (with company X) there is a clause of 12 months that is forbidding me to approach any employee of company X.
Company X is threatening John saying that they would sue me in case we decide to start this company together (please note that we will not be a competitor of company X and I will not employ John but he will be co-owner).
Could company X really sue me because I am starting a company with John who is working for the same company I was working for?
Thank you in advance.
Submitted: 1 year ago.
Category: Law
Expert:  Ben Jones replied 1 year ago.

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today. Do you have the exact wording of the restriction clause please?

Customer: replied 1 year ago.
Dear Mr Jones,Thank you very much for this. Please find attached the contract I had with my previous company (Beyond Luxury Media) and featuring the clause that my previous employer (and the current employer of John) is using to persuade us not to start our business together for the next 12 months.I look forward to receiving your answer, please do let me know should you require any additional information.Have a good day.
Phil
Expert:  Ben Jones replied 1 year ago.

Hello Phil, thanks for sending this over. 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:

{C}· Goodwill (including supplier and customer connections)

{C}· Trade secrets and confidential information

{C}· Stability of the workforce

Preventing a former employee from soliciting other employees may protect the employer's legitimate interest in the stability of its workforce. The Court of Appeal recognised in Dawnay Day v D'Alphen that an employer has a legitimate interest in maintaining a stable, trained workforce, and that this may warrant protection through restrictive covenants.

I think the issue here is whether you actually solicited or enticed away that particular employee or if he initially approached you and offered to work with you without there being any involvement on your part. The restriction is simply that you do not solicit, entice away or try to do so. One may argue that even by discussing the options once he had approached you, that you have in some way tried to entice him away, so this is really a matter for the courts.

Similarly, the courts will decide whether 12 months was reasonable to have as a restriction period or if your influence would have only been for a short period of time after leaving. It would depend on your seniority, role in the business, etc.

In summary there are no hard and fast rules in determining whether a restrictive covenant is enforceable or reasonable and only a court can decide that, taking into account all relevant factors. There is nothing stopping the employer from trying to sue but realistically they would have to convince a court that this was a reasonable drafted restriction which only went as far as it was reasonably necessary in the circumstances and was there to prevent a legitimate business interest from being unfairly affected.

I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. 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

Expert:  Ben Jones replied 1 year ago.

Hello, I see you have read my response to your query. If this has answered your question please take a second to leave a positive rating by selecting 3, 4 or 5 stars from the top of the page. I spend a lot of time and effort answering individual queries and I am not credited for my time until you leave your rating. If you still need further help please get back to me on here and I will assist as best as I can. Many thanks.

Expert:  Ben Jones replied 1 year ago.

Hello, do you need any further assistance or are you happy with the above response? Look forward to hearing from you.

Ben Jones and other Law Specialists are ready to help you
Customer: replied 1 year ago.
Hi Ben,thank you very much. All is in order, thank you very much for answering.Have a good day,
Matteo
Expert:  Ben Jones replied 1 year ago.

you are welcome, all the best

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