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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 74413
Experience:  Qualified Solicitor
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I have a clause in a SPA regarding a non compete and I want

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Hello, I have a clause in a SPA regarding a non compete and I want to see how enforceable it is?
JA: Have you discussed the non-compete agreement with a manager or HR? Or with a lawyer?
Customer: this is more for a lawyer
JA: What is your employment status? Are you an employee, freelancer, consultant or contractor? Do you belong to a union?
Customer: I'm an employee, employed by the company who brought my product, I now am leaving
JA: Anything else you want the Lawyer to know before I connect you?
Customer: I think that enough i can share the clause with the lawyer

Hello, I’m Ben, a UK lawyer and will be dealing with your case today. I may also need to ask some questions to determine the legal position.

How long have you worked for your employer? and what is the exact wording of the clause?

Customer: replied 1 year ago.
Hello I've been with the employeer for 2 and 1/2 years. With regards ***** ***** please bare with me as I need to type it out
Customer: replied 1 year ago.
The seller undertakes to the buyer and the company that it shalll not, directly or indirectly, alone or with through or as any manager, advsior consultant partner or agent for any person:
for a period of 3 years from completion carry on, be employed or otherwise engaged concerned or interested in any capacity (whether for reward or otherwise) in, provide any technical, commercial or professional advice to , or in any way assist any business carrying on business in the united kingdom or in any other jurisdiction in which the buyers group operates which is or is about to be engaged in competition with the business.
Customer: replied 1 year ago.
My question is how enforcebale is this clause, to me i feel they are resrticting me from working for the next 6 months ... that how long is left on the clause
Customer: replied 1 year ago.
Hi is there someone still looking at this? thank you

Thank you. It is a rather common occurrence for employment contracts to contain post-termination restrictive covenants. 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:

{C}· Goodwill (trade connections with customers and suppliers)

{C}· Trade secrets and confidential information

{C}· 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 to earn a living.

Non-competition covenants like this one 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. 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. If these covenants include a geographical area, their enforceability will also depend on the area they are trying to cover, such as density and population and what is considered reasonable in the circumstances.

Whilst restrictive covenants are often used as a scare tactic by employers, if an employee has allegedly acted in breach of a covenant and the employer wants to take the matter further they can do so. The following legal remedies are available to employers:

{C}· Injunction – this order of the court would seek to stop the employee from doing certain things that would make them in breach of the restrictive covenant, such as not to contact certain clients, not to use certain confidential information or not to work for a specific competitor

{C}· 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

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. That is when the affected employee has to decide whether to do so or risk the employer taking this further.

Does this answer your query?

Customer: replied 1 year ago.
I have agreed to other clauses which restrict me from approaching clients, therefore this is purely to protect them from competition. So would you agree that clause would be difficult to enforce?

So you have already abided by this clause for 2.5 years?

Customer: replied 1 year ago.

Ok I very much doubt that they can even have it for 3 years to start with – that is very long by all standards, it has already been a rather long and more than reasonable period you have adhered to it and it would be extremely difficult for them to be able to justify you still need to be covered by it for another 6 months

Does this clarify things a bit more for you?

Customer: replied 1 year ago.
thank you very much for all of this

All the best

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