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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 75983
Experience:  Qualified Employment Solicitor
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I would like to know the implications of my post-termination

Customer Question

Hi,
I would like to know the implications of my post-termination clause on my current contract.
Thanks,
Solomon.
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.

Can you please provide the clause in quesiton

Customer: replied 12 days ago.
happy to send over the contract. Or do you know just the "post-termination" clause?
Expert:  Ben Jones replied 12 days ago.

that's all I would need, thanks

Customer: replied 12 days ago.
14. Post-termination Restrictions
In order to protect the Confidential Information and business connections of the Company and each Associated Company to which you have access as a result of your employment with us, you covenant with the Company (for itself and as trustee and agent for each Associated Company) that you shall not:a. for twelve months after the Termination Date in the course of any business concern which is in competition within the Restricted Area with any Restricted Business be involved with the provision of goods or services which compete with those offered by any Restricted Business to (or otherwise have any business dealings with) any Restricted Customer; orb. at any time after the Termination Date, represent yourself as connected with the Company or any Group Business in any Capacity.None of the restrictions in the paragraph above will prevent you from:a. 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; orb. 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; orc. being engaged or concerned in any business concern, provided that your duties or work must relate solely to services or activities of a kind with which you were not concerned to a material extent in the 12 months prior to the Termination Date.The restrictions imposed on you by this section (Post-termination restrictions) apply to you acting:a. directly or indirectly; andb. on your own behalf or on behalf of, or in conjunction with, any person.Each of the restrictions in this section (Post-termination restrictions) 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. It is mutually agreed by both parties where restrictions are not enforceable by law, these restrictions apply to the United Kingdom only.You agree that if you do not comply with this section (Post-termination restrictions), damages would not be an adequate remedy and we can apply for an injunction to prevent any (further) breach, without prejudice to any other remedy that we might pursue including but not limited to claiming damages.
Expert:  Ben Jones replied 12 days ago.

Thank you. It basically states that for 12 months after your employment terminates, you should not be engaged in the provision of any service, in what is defined as the Restricted Area, which competes with those defined as a Restricted Business/Customer.

Also, for an indefinite period once you leave, you should not say that you still have any connections with the company.

You can still get involved in a business as a shareholder if you own less than 5% of shares and not breach these restrictions (e.g. if you open your own business and own more than 5% of shares then you are still subject to the above)

You can also work for a competing business as long as you operate wholly outside of the Restricted Area, or you only provide services which were not what you did in the 12 months before you left the current employer.

Expert:  Ben Jones replied 12 days ago.

Hopefully, I have answered your query in a way that is simple and easy to understand. If anything remains unclear, I will be more than happy to clarify it for you. In the meantime, thank you once again for using our services.

Customer: replied 12 days ago.
Thanks for the quick reply. So I'm more interested in this clause"You can still get involved in a business as a shareholder if you own less than 5% of shares and not breach these restrictions (e.g. if you open your own business and own more than 5% of shares then you are still subject to the above)".Does this mean that I cannot start a company of my own indefinitely whereby I own more than 5% of shareholding in the company?
Customer: replied 12 days ago.
Specifically, does the below mean that I cannot create a company of my own indefinitely (even beyod 12 months)?" if you open your own business and own more than 5% of shares then you are still subject to the above".
Expert:  Ben Jones replied 12 days ago.

You can but it is subject to the following:

a) In the first 12 months after termination, it should not breach the restrictions mentioned above, where you compete with a restricted business in the restricted area

b) After 12 months, you can do as you wish

Customer: replied 12 days ago.
Great, thanks for this. So, lastly, I wanted to get a further clarification about this:"if you open your own business and own more than 5% of shares then you are still subject to the above".Does this mean that I can still own a business with more than 5% (within 12 months) as long as I don't associate myself with or compete in a restricted business in the restricted area.thanks
Expert:  Ben Jones replied 12 days ago.

yes you can - you are free to do as you wish in terms of owning a business after your current employment terminates, as long as it does not breach the anti-competition restrictions

Customer: replied 12 days ago.
Thanks very much, Ben. Have a great weekend!
Expert:  Ben Jones replied 12 days ago.

You are most welcome. If you have any further questions about this, please do not hesitate to get back to me and I will be happy to help. All the best