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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50206
Experience:  Qualified Employment Solicitor
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I have a Restrictive Covenant within my employment contract.

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I have a Restrictive Covenant within my employment contract. Can I join a direct competitor?

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today.

Do you have the wording of the restriction please?

I will then be able to look at it later this eve thanks

Customer: replied 1 year ago.
Hi Ben - Apologies, I had sent this in the additional info field
Customer: replied 1 year ago.
I'm a currently looking to move jobs, to a direct competitor, although I have the below restrictive clause in my contract of employment. My job, and new potential job, are both field sales/account management. My interpretation of the below is that I shouldn't contact any of my current employers’ clients, try to poach any employees, or disrupt relations with suppliers (without written permission) - In addition to this, I must make my new potential employer aware of the clause (which I have and they are running through their legal team also). Please correct me if I'm wrong. One of my concerns lies within 1.1 whereby it states 'directly or indirectly', as part of my new potential job will be helping to build and grow the company which may well entice said clients in the distant future. I plan to leave on good terms although want to ensure I’m protected, just in case.Question: With this clause, am I OK to join this competitor (abiding by the clauses)? - Any guidance and pointers will be gratefully received.Restrictive Covenant1. The Employee undertakes to the company on behalf of himself and as agent that he will not (without prior written consent), whether as principal or agent, and whether alone or jointly with, or as a director, manager, partner, shareholder, employee or consultant of any other person, directly or indirectly;1.1 tender for, canvas, solicit or endeavour to entice away from the Company the business of any Customer of the Company. This restriction is limited to activities of the Employee in competition with services they provided during the Employment.1.2 offer to employ or engage or solicit the employment or engagement of any other Employee (whether or not such person would commit any breach of their contract of employment or engagement by reason of leaving the service of their employer);1.3 tender for, canvas, solicit or endeavour to entice away from the Company the business of any Supplier of the Company. This restriction is limited to activities of the Employee in competition with services they provided during the Employment.2. In the event that no duties have been assigned to the Employee by the Company during a period immediately preceding the termination of the employment then the Restricted Period will be reduced by a period equivalent to the length of time for which no duties have been assigned to the Employee.3. At no time after the termination of the Employment shall the Employee directly or indirectly represent himself as being interested in or employed by or in any way connected with the Company or any Group Company, other than as a shareholder or former employee of the company.4. The Employee agrees that they will draw the provisions of this clause to the attention of any third party who may at any time before or after the termination of the Employment offer to engage the Executive in any capacity and for whom or with whom the Executive intends to work during the Restricted Period.5. The Employee and he company agrees that, having regard to all the circumstances, the restrictions contained in this clause are reasonable and necessary for the protection of the Company and that they do not bear harshly upon him and the parties agree that:5.1 each restriction will be read and constructed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason the remaining restrictions will not be affected; and5.2 if any restriction is found to be void but would be valid and enforceable if some part of it were deleted, that restriction will apply with such deletion as may be necessary to make it valid and enforceable.

Hi there, 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 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.

This is your basic legal position. I have more detailed advice for you in terms of the options the employer has if they think you have breached the restriction, which I wish to discuss so please take a second to leave a positive rating for the service so far (by selecting 3, 4 or 5 stars) and I can continue with that and answer any further questions you may have. Don’t worry, there is no extra cost and leaving a rating will not close the question and we can continue this discussion. Thank you

Ben Jones and 2 other Employment Law Specialists are ready to help you
Customer: replied 1 year ago.
Hi Ben,Thanks for the detailed information, I have left your rating as requested.Do you consider the above to be a Post-termination restrictive covenant or a non-competition covenant?There is a level of ambiguity in the wording of the restriction which I cannot decipher (although I acknowledge your point that this may be difficult to enforce).Another question: The contract does not state any geographical location? How does this sit legally?I look forward to your other comments.
Customer: replied 1 year ago.
Hello Again,I have seen your other comment on a similar question:-"Non-solicitation covenants: To be valid, the covenant should be restricted to customers with whom the employee had contact during a specified period before leaving."Question: The restriction in question doesn't appear to outline the above. How does this affect the legality of the restriction?and"Non-dealing covenants: 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."Questions:If you consider the said restriction to be a non-dealing covenant, can I have any contact with previous clients. Would this commonly be seen as to 'endeavour' to entice clients?The company has sites nationwide and globally but it does not state anything in terms of geography in the restriction. What does this mean for the legality of the restriction?

Hi there, restrictive covenants is the umbrella term for non-solicitation, non-dealing and non-competition covenants - these are all types of restrictive covenant.

If no geographical location is given then that makes it a kind of universal restriction so could make it more difficult to enforce, but generally only if they try and enforce it very widely, for example if you set up a business further away from their usual business area. If you are very close to them and clearly encroaching on LBIs then a geographically non-specific restriction can still apply.

As to the other questions, they do try and limit the type of customers you should not have contact with as they state: Tender for, canvas, solicit or endeavour to entice away from the Company the business of any Supplier of the Company. This restriction is limited to activities of the Employee in competition with services they provided during the Employment. - so they are limiting it to people you have dealt with and whilst not limiting it to n exact period of time, they are still not simply covering all of their clients

The restrictions are not really a non-dealing covenant they are non-solicitation and non-competition ones.

Customer: replied 1 year ago.
Hi Ben - Thanks for the information.Given that you partly view this as a non-competition restrictive covenant, in your professional experience, would you consider it to be legal to join such a competitor? - I'm conscious of your previous comment that such covenants can prevent employees working with competing businesses although with the restriction in question, I'm not sure if it's just to protect my current employers LBI's and/or to prevent me working for competitors. I assume just the LBI's but want to be crystal clear.Any final pointers, suggestions and recommendations would be great.Thanks again.

You have to remember that the only way to actually prevent you from working for a competitor is to take you o court and convince the court that the restrictions were reasonable and should be enforceable. This very rarely happens unless there are stakes are clearly high and the employer has a lot to lose by not enforcing the restrictions. As the law on such restrictions is so wide and each situation depends on its own circumstances it is very difficult to say with any degree of certainty how enforceable a restriction would be in each case and only the courts can decide that. I would say that in the circumstances a blanket restriction from working with a competitor is unlikely to be valid but if they state that you cannot do particular work with them if it will directly affect their customers or poach their specific clients you worked with, then those could be more enforceable, but again only if they go to court and get a court decision in their favour

Customer: replied 1 year ago.
OK - Many thanks Ben. Great advice, just what I needed!

you are welcome, all the best