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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 75932
Experience:  Qualified Solicitor
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I am looking for some advice before signing a new employment

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Hi, I am looking for some advice before signing a new employment contract. Thanks
JA: Where are you? It matters because laws vary by location.
Customer: Derbyshire
JA: What steps have you taken so far?
Customer: Read the contract
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: In my contract it says that I cannot work for a competitor for 12months after the termination date. I would like to know if this is reasonable?

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.

Please copy and paste the exact wording of the relevant clause/s on here

Ben Jones and 3 other Law Specialists are ready to help you
Customer: replied 6 days ago.
18.8 In order to protect the Confidential Information and business connections of the Company and any Group Company to which you are likely to have access as a result of your employment, and to protect workforce stability, you covenant with the Company (who contracts for itself and as trustee and agent for each Group Company) that you shall not without the Company's written consent:
18.8.1 for 12 months after the Termination Date, solicit or endeavour to entice away from the Company or any Group Company the business or custom of any Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business;
18.8.2 for 12 months after the Termination Date, deal with any Restricted Customer in the course of any business concern which is or intends to be in competition with any Restricted Business;
18.8.3 for 12 months after the Termination Date, be involved with the provision of goods or services to any Restricted Customer in the course of any business concern which is or intends to be in competition with any Restricted Business;
18.8.4 for 6 months after the Termination Date, be involved in any Capacity with any business concern which is or intends to be in competition with any Restricted Business;
18.8.5 for 12 months after the Termination Date in the course of any business concern which is or intends to be in competition with any Restricted Business, employ or engage or otherwise facilitate the employment or engagement of any Restricted Person, whether or not such person would be in breach of contract as a result of such employment or engagement;
18.8.6 at any time after the Termination Date, represent yourself as connected with the Company or any Group Company in any Capacity, other than as a former employee, or use any registered names or trading names associated with the Company or any Group Company.

Hi there, 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-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.

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.

I trust that everything has now been dealt with to your satisfaction and your original question has been resolved. 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.