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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 50187
Experience:  Qualified Solicitor
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I worked for ltd company 5 years, signed contract. off,

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I worked for ltd company 5 years, signed contract. laid off, went back to work now he is a sole trader. finished july, he told me to complete the remaining jobs, receive payment, remove equipment and to tell the customers there is no more cleaning the company has ceased trading the customers relied upon my attendance. Some of his customers are asking if I would carry on cleaning, main points are could I carry on cleaning his old customers, is the contract from a ltd company i signed still valid through his sole trading even though a lay off, could he sue me or stop me working his old customers

Ben Jones : Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Were there any specific restrictions preventing you from doing so?
Customer: replied 3 years ago.

I signed a contract when he was a limited company which barred me from setting up doing the same business. I was laid off, he then set up as a sole trader now has ceased trading but still threatened to sue if I clean any of his ex customers

Hello, your old contract with the limited company would not have transferred over to when you started the job working under the same person as a sole trader. The two are separate employments and when your employment with the comp[any terminated so would have the contract you had with it.

However, if the clients are the same, then the old restrictions could still apply now, assuming there was a defined time limit within which they would be valid. Saying that, 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. There are a few different types of restrictive covenants that can be applied, these being:

Non-competition covenants, such as the one you had, 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:
• Obtain an interim injunction preventing the employee from doing certain things that would make them in breach of the restrictive covenant
• 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. Please take a second to leave a positive rating, or if you need me to clarify anything before you go - please get back to me and I will assist further as best as I can. Thank you
Customer: replied 3 years ago.

Where do I stand with him as he has ceased trading can he still stop me from working his old customers who have asked me for my assistance

It is quite unlikely, especially as he has now ceased trading so he is not affected by this in any way. He cannot stop you from trading, all he can do is try to court to issue an injunction preventing you from doing so but in the circumstances that is quite unlikely to be given.

If your original question has been answered I would be grateful if you could please quickly rate my answer - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you
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