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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50143
Experience:  Qualified Employment Solicitor
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I was recently made redundant and have just dug out

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I was recently made redundant and have just dug out my previous employers contract and i had some questions relating to the post termination restrictions which i will write in full at the end of this message.
My questions are
1-I am planning to start my own estate agent which will be in competition with my previous employer although at a different end of the market (they are High Street whereas i will be cheaper as online) so can any of these covenants stop me from doing this?
2-The covenants mention geographical areas and although i plan to cover the area around my previous office i wont be actively targeting business there. However the area i am targeting will be where my employer did have an office so will this cause any issues?
3-I have been approached by someone i used to work with who said to let him know if i was going to be setting up a rival as he would be interested in joining me as a partner. Can i do this and/or does the fact he approached me help my position if i was to set up with him?
Thanks in advance for your help.
22.1 In order to protect the confidential information, trade secrets and business connections of any group company to which you have access as a result of the appointment, the company covenants with the company (for itself and as a trustee and agent for each group company) that you shall not:
(I) for 6 months after termination solicit or endeavour to entice away from any group company the business or custom of a restricted customer with a view to providing goods or services to that restricted customer in competition with any restricted business; or
(I I) for 6 months after termination in the course of any business concern which is in competition with any restricted business, offer to employ or engage or otherwise endeavour to entice away from any group company any restricted person; or
(iii) for 6 months after termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any restricted customer in the course of any business concern which is in competition with any restricted business; or
(Iv) at any time after termination, represent yourself as connected with any group company in any capacity.
None of the restrictions in the above clause shall prevent you from:
(I) holding an investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognised stock exchange; or
(ii) being engaged or concerned in any business concern insofar as your duties or work shall relate solely to geographical areas where the business concern is not in competition with any restricted business; or
(iii) being engaged or concerned in any business concern, provided that your duties or work shall relate solely to services or activities of a kind with which you were not concerned with to a material extent in the 6 months before termination.
22.3 The restrictions imposed on the company by this clause 22 applies to you acting:
(I) directly or indirectly; and
(ii) on your own behalf or on behalf of, or in conjunction with, any firm, company or person.
22.4 The periods for which the restrictions in clause 22.1 apply shall be reduced by any period that you spend on garden leave immediately before termination.
22.5 if you receive an offer to be involved in a business concern in any capacity during the appointment, or before the expiry of the last of the covenants in this clause, you shall give the person making the offer a copy of this clause 22 and tell the company the identity of that person as soon as possible.
22.6 The company and you entered into the restrictions in this clause 22 having been separately legally advised.
22.7 Each of the restrictions in this clause 22 is intended to be separate and severable. If any of the restrictions shall be held to be void but would be valid if part of their wording were deleted, such restriction shall apply with such deletion as may be necessary to make it valid or effective.
22.8 You will, at the request and expense of the company, enter into separate agreement with the group company in which you agree to be bound by restrictions corresponding to those restrictions in this clause 22 (or such of those restrictions the company deems appropriate) in relation to the group company.
Hello how long did you work there for?
Customer: replied 2 years ago.
HelloI worked there for just over 15 months
Hello, sorry I was unexpectedly called into a meeting earlier. Do you have the definition of what a 'restricted person' is according to your contract? Also when did your employment with them end?
Customer: replied 2 years ago.
No worries,There are no definitions at all in the Contract of Employment. I copied that whole section word for word.Also i meant to mention that i have no intention at all of approaching any of their clients just to clarify.
Customer: replied 2 years ago.
Oh the last day of my employment was 10th October 2015
Thank you. The clauses are rather standard but they are incomplete. They mention you are restricted from doing certain thigs involving restricted persons and a restricted business but there is no definition of what these are. This would make the rather difficult to enforce because they are too general and do not go into the necessary detail in defining what exactly you are restricted from doing. Just referring to restricted persons and business and not knowing what these actually are will make it much harder for them. As far as the law is concerned, 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 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. There are a few different types of restrictive covenants that can be applied, these being: 1. 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. 2. Non-dealing covenants are a wider restriction and not only restrict solicitation but any other general contact with clients. The enforceability of a non-dealing covenant will depend on the interest being protected and can be influenced by a substantial personal connection the employee enjoys with a specific client. However, such a covenant will not be enforceable if it prevents any sort of contact with the client. The restriction must be focused on the specific type of contact that would directly affect the employer's business. 3. Non-competition covenants 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:{C}· Obtain an interim injunction preventing the employee from doing certain things that would make them in breach of the restrictive covenant{C}· 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 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
Customer: replied 2 years ago.
Ok thanks for the reply.What about the situation with my ex-colleague who has alproached me about us working together in partnership.Would my old employer have a case against me even though my colleague approached me?
Again, as there are no definitions of what a restricted person is, it is difficult to work out which restriction applies to this. I think the following is the relevant wording: "offer to employ or engage or otherwise endeavour to entice away from any group company any restricted person". It talks about offers to employ them or entice them away - the initial act was from the employee, not by you, so that will reduce the seriousness of what you propose to do as it is the employee who initiated the contact which may lead to their employment with you. Hope this clarifies?
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