How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • Go back-and-forth until satisfied
    Rate the answer you receive.
Ask Ben Jones Your Own Question
Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 75039
Experience:  Qualified Employment Solicitor
29905560
Type Your Employment Law Question Here...
Ben Jones is online now

I am looking at starting my own business however my

Customer Question

Hello I am looking at starting my own business however my employment contract with my current employer has a non compete clause. I am looking for advice with this and wondering if there is any way round it.
JA: Have you discussed the non-compete agreement with a manager or HR? Or with a lawyer?
Customer: No
JA: What is your employment status? Are you an employee, freelancer, consultant or contractor? Do you belong to a union?
Customer: employee and so not belong to a union. I am an employee to a small business
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: thats great. Not much else to know. I have worked in my current employment for 10 years and I now want to start up on my own to look after myself and my own interests rather than someone else’s however the non compete contract is problematic.
Submitted: 12 days ago.
Category: Employment Law
Expert:  Ben Jones replied 12 days ago.

Hello, I’m Ben. It’s my pleasure to assist you today. I may also ask for some preliminary information to help me determine the legal position.

Expert:  Ben Jones replied 12 days ago.

What exactly does the clause prevent you from doing? Please note this is not always an instant service and I may not be able to reply immediately. However, rest assured that I am dealing with your question and will get back to you as soon as I can. Thanks

Expert:  Ben Jones replied 11 days ago.

Without the requested information, I can only provide you with general information, which hopefully will still be useful to you. It is common for employment contracts to contain post-termination restrictive covenants, which restrict the employee’s activities once their employment terminates. An employer would understandably want to protect their business from a departing employee's knowledge of confidential information, business connections, influence over clients, suppliers, staff, etc. However, a covenant that restricts an employee's post-termination activities will be automatically unenforceable by 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.

The first thing to consider is what legitimate business interests (LBIs) can the employer try and protect? The most common ones are:

- Goodwill (trade connections with customers and suppliers)

- Trade secrets and confidential information

- Stability of the workforce (preventing poaching of employees)

If they are trying to protect an LBI, any relevant restriction must be drafted no wider than is reasonably necessary to protect that interest. Generally, the courts would try and balance the interests of the employer's business and the employee’s right to freedom of movement and earning a living.

Non-solicitation covenants are used to prevent an employee from enticing away their ex-employer’s clients. Solicitation generally requires a direct and specific appeal to a client to encourage them to transfer their business; and a personal connection to be able to influence such a move in the first place. There has to be a positive act by the employee such as to "tempt, lure or persuade” the client to do business with them. Ideally, the restriction should be limited to specific customers with whom the employee had contact during a specified period before leaving, or with which they enjoy a close business relationship. If the employee initially brought the clients to the employer when they started working there will not in itself stop a non-solicitation covenant from applying, although it may be a factor relevant to the length of the restriction. Also, if a client no longer wants to do business with the former employer, that will not be relevant in deciding whether or not to uphold the restriction.

Non-competition covenants prevent an employee from working with a competing business or setting up to work in competition with their ex-employer. A covenant simply wishing to prevent competition will not be enforceable, especially as competition is generally seen as healthy for consumer rights. However, a non-competition covenant trying to protect an LBI can be. Such covenants will generally only be 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 duration of the restriction can be important, with 6 months usually seen as the maximum in standard situations and anything longer can be seen as unreasonable.

Restrictive covenants are often used as a scare tactic by employers, hoping that an ex-employee will simply not attempt to breach them in order to avoid potential legal trouble. However, if the restrictions are allegedly breached, the employer has the right to take the matter further. The following legal remedies are available to them:

- Injunction – an order of the court to stop the ex-employee from doing certain things that would make them in breach of the restrictive covenants, such as not to contact certain clients, not to use certain confidential information or not to work for a specific competitor. It can also instruct them to deliver up certain confidential information, which they may have tried to use

- Damages - compensation for loses which have directly resulted from the breach of the covenants, although it would only be possible if such losses are identifiable. This will normally include loss of profits on contracts or opportunities, which have diverted by the employee. It is potentially also possible to make a claim against the ex-employee’s new employer, if they had knowingly or intentionally induced the employee to breach their covenants

In summary, there are various factors which deal with the reasonableness and enforceability of 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. In the end, only a court can decide if a covenant is legally enforceable, so unless the employer goes to court and succeeds, they will only be able to rely on the employee’s own compliance with the restrictions.

Expert:  Ben Jones replied 11 days ago.

Hello, following my main response above, I just wanted to check that everything was clear. If you have any further queries about this issue, you can reply to me at any time on this portal and I will be happy to help. Thank you.

Expert:  Ben Jones replied 10 days ago.

Hello, I trust that everything has now been resolved to your satisfaction and your original question has been dealt with. If you have any further queries about it, please do not hesitate to get back to me on here. In the meantime, I wish you all the best.