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Buachaill, Barrister
Category: Law
Satisfied Customers: 10974
Experience:  Barrister 17 years experience
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I am the manager of an estate agenst and have been approched

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I am the manager of an estate agenst and have been approched by a rival firm who would like to employ me. Will the following clause in my contract prevent me from taking up the job offer or is the clause a "restraint on trde " and invalid.
Restrictions on Competition
Unless expressly permitted to do so in writing by a partner of the firm, for a period of 1 year after you leave the firms employment.
a) You will make no contact with existing clients of a firm or contacts with whom you knew that the firm was intending to attempt to do business to do business with that client.
b) nor will you set up in business with a name similar to “S******* and S******* LLP”, nor set up a business similar to S**** and S******* LLP (offering any of the services offered by the firm) or be employed in a similar capacity to your current employment in business within three miles of your usual place of work.
c) nor will you make contact with employees of the firm with a view to encouraging them to leave the firm.
Thank You
1. Dear Stuart. I regret to say that this clause would be enforceable, should your employer seek to enforce it. This is because, s it is not overbroad in its wording, as it only applies for a period of one year and then only to customers or potential customers of the estate agency you are seeking to leave. Essentially, it would mean that in your new job, you couldn't speak or solicit customers from your existing employer. In order for the clause to be struck down as a restraint of trade, it would have to prevent you being employed at all, or be wider that than the goodwill and customer base of your current employer. This clause has been carefully drafted so it is within the law, I regret to say. Essentially, it means you will have to join a firm which is not competing with your existing firm or where there is no customer overlap.
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Customer: replied 2 years ago.
Thank you for the prompt reply, however i would not be looking to take any existing clients, as people do not move very often. The only business that I would be seeking with the new firm would be "New Business". As I would not be taking any clients would the clause still be enforceable. I understand that Clause A, and C - but would clause B be enforceable if no existing clients were taken with me
3. I regret to say that an area restriction, as is contained in clause B would be enforceable if it can be shown that the area restriction in the prohibition is not too wide. Geographical restraints have been upheld in areas where there is a defined geographical area within which people operate. There is one case, in an urban area where a two mile restraint for a solicitor was upheld whilst there is a case where a 12 mile restriction in the East End of London was struck down. So, my own view is that a three mile restriction ie a radius of 3 miles is not overbroad in an urban area. These clauses are usually drafted from the previous cases and how they were decided.
4. The solution would be to work in the office of the rival firm outside the geographical restriction for the first year and then move to within the three mile limit once the year period had expired.
Buachaill and other Law Specialists are ready to help you
Customer: replied 2 years ago.
Good Morning
Following on from our covnersation yesterday, I have reviewed further documents, and my letter of appointment does not have any such clause in it just states that the notice period would be 4 weeks I joined the firm in July 2009. I then recieved a full contract of employmet in November 2009 which I had to sign 4 months after starting in the role. As in effect i had no choice but to sign as I was already in the role and no such clause had been mentioned before. Does this make the clause invalid ?Stuart
5. Dear Stuart, I regret to say that just because you were in a job for four months when you signed an employment contract which altered the terms upon which you had been appointed, this does not make the restraint of trade clause in the employment contract invalid. the law essentially takes the view that parties are free to contract or not. Here, your remedy would have been not to have signed the employment contract or else, to have sought alternative employment elsewhere. The law does not absolve you from a contract which you signed, I regret to say. Nor does the fact you were in employment when the employment contract was signed make the individual terms of the employment contract invalid.
Customer: replied 2 years ago.
Ok thanks. It is of course not really a free choice when you have given up a role to accept the role offered.(without the clause) It is not easy to always find an appropriate new Job, so not signing was never a real option, nor was finding an alternative Job, the remedy. Would this not even constitute a reasonable agrument.I was asking this question after readingnthe following case. I do appreciate your opinion, I am just lookimg to see if there is a way around the agreement as I work in rural Dorset and opereating out of an alternative branch would not be a viable option as the nearest other branch is 20 miles away.The town that I work in already has 6 other agents, so there is already competion in the town. I also thought that consideration was needed and that the contract/claus should not be one sided.This is the extract - (am I now just clutching at straws ?)Is an employment contract signed one day after Employee starts work enforceable?
I’ve noted a few times before the dangers for an employer of allowing an employee to start working before they have signed a written employment contract. Rejdak v. Fight Network Inc. is a great case that deals with this problem.
Rejdak was offered a job by a manager of Fight Network in a phone call on a Friday night in which the parties agree to a start date, title, and salary. On Monday, Rejdak quit his old job and reported for work with the Fight Network. He worked all day Monday, and was given a written contract to sign that day. He took it home, signed it, and returned it to the employer the next day. It was a standard form employment contract used by the Fight Network. The contract included a three month probationary period during which the employee could be dismissed without notice.
Redjak was dismissed within that three month period, and the employer argued, relying on the probationary period in the contract, that it did not need to give Redjak any notice. Redjak sued for wrongful dismissal, claiming ‘reasonable notice’ entitlements. He wins, because the employer made an all too common error–it allowed Redjak to start work before he had signed the written employment contract.
Redjak was already employed under an oral contract when he was given the written contract–albeit his oral contract was only 1 day old. The oral contract did not include a probationary period, or say anything about notice of termination for that matter. Therefore, he was entitled to ‘reasonable notice’ under that oral contract, since courts imply an obligation to give reasonable notice when an employment contract is silent on how much notice of termination is needed.
So when the employer introduced the written contract with the probationary period, it was really seeking to alter the existing verbal contract. Redjak signed the new written contract, because, according to the court, he ‘had no choice’, but that doesn’t matter, because he did not receive any new consideration for the amendment. An employment contract cannot be amended unless both sides receive something new in the amendment (new consideration must flow both ways). Here the employer got a new benefit (a probationary period), but the employee got nothing new.
The employer argued there was new consideration in the form of a 2 week holiday provision and a benefits package. But the court rejected that argument. The holiday pay was simply what Redjak was entitled to anyways under the Employment Standards Act, and new consideration cannot come in the form of a promise to comply with a statute. The benefits were provided to all Fight Network employees, so the Court rejected the argument of the employer that Redjak was not already receiving them under the oral contract.
In the result, the Court ruled that the written contract was unenforceable for lack of consideration to the employee. Therefore, the oral contract applied, including the implied term requiring reasonable notice. The Court set reasonable notice at 4 months, even though Redjak had been employed for less than 3 months and took into consideration that Redjak had quit a secure job to come to Fight Network.
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Customer: replied 2 years ago.
I also thought the writen statement of employement had to be issued within 2 montghs of Joining -m As per government web site. Surley 4 months into employment will be looked at poorly.Stuart
6. Dear Stuart, you are correct in thinking that the courts don't look kindly upon restraint of trade clauses in employment contracts and they frequently attempt to find ways around them. I would read the case you have cited to me about whether a probationary period was included in the employment contract in that light. Whoever was judging the case went out of their way to find a way to remove the requirement of there being a probationary period. A court will have a lot of sympathy with you given the circumstances of working in rural Dorset. The clause effectively requires you to move to a different town in order to seek employment with another firm. However, this does not prevent the clause being enforceable. Whilst it may not look good that you were four months working when you signed the employment contract, this does not in law prevent it being enforceable. I would suggest you get a second opinion if you are not happy with my view. However cruel these restraint of trade clauses are, they have been upheld by the courts.