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Employment Contract Question


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Hi all,

 

Looking for a little advice, inside knowledge or guesses on this.

 

4 years ago I started working for the biggest and most successful company at what we do. In my contract is a stipulation that I am not allowed to work for a competitor within 12 months of leaving my current job. At the time this didnt seem an issue as there was nowhere further up to go. However in the last couple of years things have changed, they have been overtaken by many other companies due to a combination of apathy and stupidity. Now I am in a situation where I could go to a competitor and get a tidy increase on my salary without much effort at all. Basically does anyone know how enforceable that clause is? Could I argue restriction of my earnings or something like that? Would it still be in place if they were to sack me?

 

Sorry to ask these things on here but I am not sure who to ask. Asking our HR is a total no-go.

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Isn't that stipulation 'restraint of trade'? Would your current employers think you might be able to pass on 'trade secrets'? Sometimes employers stipulate that you mustn't take any of their customers with you to your new employer for a set period. This happened to me and I was unable to take clients from my employer for 3 months.

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Good old Wiki

 

[h=2]Restraining workers[/h] See also: Non-compete clause

Under English law, restraining clauses in employment contracts are enforceable if:

 

  • There is a legitimate interest which needs to be protected. Examples of such interests include business connections and business secrets.
  • The restraint is reasonable, i.e. sufficiently protects the interest and goes no further.

Generally, if a restraining clause is found to be unreasonable, then it will be void. In certain circumstances though the court may uphold it either by construing ambiguities or by severance. Severance consists of the application of what is known as the "blue pencil test"; if individual words which make the clause excessively wide are able to be crossed out and the clause still makes grammatical sense, without altering the nature of the obligations, then the courts may be willing to sever the illegal aspects of the clause and enforce the remainder.

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Non-compete agreements are often drafted as part of a basic employment contract, or are included as a separate document that is reviewed and signed at the beginning of a term of employment. Essentially, the non-compete agreement ensures that upon the termination of the employment period, the former employee will not engage in activities that place him or her in direct competition with their former employer. While the exact terms of a non-compete agreement may vary and are subject to local laws regarding employment, the non-compete agreement is generally an effective means to ensure that former employees do not make use of proprietary information to lure away customers and thus damage their former employer.

 

 

 

 

Most non-compete contracts will usually specify a specific time frame that the former employee is expected to refrain from engaging in employment that will place him or her in direct competition with a former employer. Generally, the time frame ranges from one or two years to up to five years. There are two basic reasons for this strategy. First, even if the individual had intimate knowledge about the inner workings of the company, that knowledge becomes increasingly obsolete over time. Second, the accuracy of such important matters as the contact information for the top ten clients of the company will also decrease with time. The end result is a former employee who is not able to utilize proprietary information to steal away customers and thus hurt the profitability of the company.

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I wouldn't waste money on legal advice unless you are very senior.

 

Prima facie, the clause is not enforceable. Your employer would have to go the trouble of convincing a judge that it should be enforced.

 

If you're not a director or senior manager, the chances are that the restriction will be void. The chance of your current employer actually spending time and money attempting to enforce it will also be very small unless you are of genuine strategic importance to them.

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You have to take a balanced view of your own circumstances. If your job does involve interfacing with Clients, then there is nothing to stop your (present) employer from informing all your present Clients that you are prevented from doing business with them at your (new) company for 12 months. Depending on circumstances, that might limit your value to a new employer.

 

Only you can decide.

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I had a post-termination covenant at one of my former employers. I do not believe that they are legally enforceable ( I think right to trade trumps it ), although I chose to honour it because it simply prevented me from working in the same city doing a similar job; I had the option of taking my skills elsewhere.

 

This sounds like its global; can't see it standing up.

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As others have said it really depends on the drafting and how reasonable the clause is. Eg my company has clauses in our contracts that stop our staff from trading with people they held a relationship with during their employment, but what we cannot do is restrict them from performing their profession within their industry.

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AS others have said a restrictive covenant can be both enforceable and unenforceable

 

A restrictive covenant will only be enforceable if it is no wider than reasonably necessary to protect legitimate proprietary interests

 

If it is far too excessive or has total blanket coverage, I. E . you can not work for any company with in a said radious of the existing company or a competitor for a number of years then this may be unenforceable and unreasonable. Each situation is different and you need to take legal advice .

 

Some employers have taken legal action such as Romero Insurance Brokers Limited v Templeton and another,

 

It depends on the wording of your contract

Edited by Viking Warrior
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We have these restrictions in place but never enforce them - we do enforce notice periods though and put people on "gardening leave" - even quite low down on the ladder. Basic notice period is 1 month for even the most junior minion, running up to 6 months for exec level

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