Non Compete clause in my contract - Can it be enforced?

[anonymous-user]

There is an argument that signing up to an unreasonable clause is better than signing up to a reasonable one, because the unreasonable one is not likely to be enforced, but I don't advise that, as you never know what might happen, and sometimes Judges get things wrong (I mentioned Scully v Lee above - a case in which the trial Judge wrongly clobbered my employee client on an unreasonable clause, and I had to go to the Court of Appeal to get him out).

[Jasandjules]

AW111 said:

I have successfully argued a non-compete clause down from an unreasonable 2 years to 6 months before signing an employment agreement. Once you have signed, it gets more difficult.

Does the prospective new employer know about the non-compete clause?
If so, what is their attitude?

You are better off seeking garden leave (i.e. the payment of your salary) for the period of time they wish to have a restraint of trade.

[Barwy]

A lot of response to this thread, hopefully there's other people on the forum which have been following these very informative posts and it will help them out too.

BV if you don't mind I'll send you a PM containing the clause and some more detail, as I understand you are THE MAN when it comes to anything legal and I appreciate your input already.

Someone asked what the rival firm offering the job has done in terms of the non compete clause, they want to find a way around it legally rather than ignore it, they've got lawyers involved to offer advice on their side. The last thing I really want is to get wound up in all kinds of legal action and court proceedings etc. So I'm still considering whether the jump is the right thing to be doing.

[anonymous-user]

There is often a deal to be done between the two employers, which may involve, for example, agreed ring fencing of certain customers, or an agreed reduction in the period of restraint. Jaw jaw is almost always better than war war.

[0000]

I've signed restrictive covenants in the past. No point reiterating the advice I took at the time as most of it's above, or not relevant here. In the end I managed to work with a company who'd let me work mostly remotely for a different client set for 6 months, who then switched me back after I was outside the restrictive covenant - perhaps a fine line but it worked out.

What I would say though - I won't sign one again! I've not had any issues getting them removed since either.

[Fish]

All I'd add to the mix and certainly in my business area is that you often come across the same people time and again, the world is a small place. Just because your current employer does not have the right opening at this point in time to further your career does not mean they will not have at a point in the future.

I would be very careful to manage the situation so I haven't burnt my bridges...

[Tony 1234]

Breadvan72 said:

Talking of restraints of trade, guess who got Jenson Button out of his contract with Benetton, back in the day? [/bragging]

[outnumbered]

Breadvan72 said:

The employee never started the new job. There was initially correspondence between the parties which led to the employee agreeing to stay off work pending negotiations. When negotiations broke down, the employer applied for an injunction. The Court ordered a speedy trial, with the employee undertaking to stay away from the rival business until judgment. A speedy trial is now the norm in these cases. Why argue on an interim basis when you can cut to the chase and have a final determination? Also, the speedy trial timetable puts pressure on both sides to settle, and the court likes that. This one did not settle. The upshot was a three day trial, judgment for the claimant, and an injunction for the duration of the post termination restraint (by that time it had about ten months still to run). The employee has to pay the employer's costs, which are about £170,000 (50K for me, 120K for the solicitors, a good US firm with a City of London office). The employee's own costs will have been about £100K (another London office of a US firm, counsel from Littleton Chambers). Speedy trials are labour and cost intensive. It remains to be seen whether the rival business will bankroll the employee. Both companies are American, well funded, and aggressive. The employee was a 60K a year engineer.

Edited by Breadvan72 on Saturday 8th August 10:04

Blimey. Would the details of the companies involved be made public ? I don't suppose it would help the original employer to attract good staff in future if people know it will try to stop them working in the same industry.

[anonymous-user]

The case is called Hyprotech UK Ltd v David Frankum. Hyprotech is a UK subsidiary of the US Aspentech group. The rival company is Heat Transfer Research Inc, also from the US. The business context concerned software for the design and optimisation of heat exchangers in process industry settings, such as power stations.

The employee is not prevented from working in the industry. He is unable to work for a close rival in a job that would lead to a risk of use of confidential information. The former employer identified to the court various jobs that the employee could do without breaching the covenant.

The former employer has no difficulty attracting staff, as it is a successful company. Sometimes companies enforce covenants against an individual "pour encourager les autres", to remind employees that contracts are to be taken seriously.

If I were King, I would abolish restrictive covenants, but I am not King, nor likely to become so, and so I try to enforce covenants when people hire me to do so, and oppose them when people hire me to do that.

Edited by anonymous-user on Sunday 9th August 23:03

[blueg33]

Breadvan72 said:

I try to enforce covenants when people hire me to do so, and oppose them when people hire me to do that.

I love this, this is my lawyer quote of the day, it almost says "I will fight for whichever side pays me the most"



nb I don't mean this in a nasty of pejorative way, it just tickled me.

[anonymous-user]

That sounds like Yojimbo or the Man With No Name (the US version of Yojimbo), which is cool, but in reality I am but a taxi on a rank. Whoever gets me first, gets me. It's not who pays the most!

http://shop.moderntoss.com/products/legal-longshot...

Edited by anonymous-user on Monday 10th August 12:39

[julianc]

Breadvan72 said:

Lord Denning said:

It is thus established that an employer can stipulate for protection against having his confidential information passed on to a rival in trade but experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period.

Nowadays, the word employee would be used instead of the word servant, (Lord Denning was old fashioned, and spoke the words quoted in 1977), but the principle enunciated by Lord Denning (the case was called Littlewoods v Harris, the business context was mail order catalogues) is still applied on a regular basis.

Wow, haven't seen Lord Denning's name used for ages. I have held the view for many years - as someone who doesn't work in the legal profession - that if I was ever tried in court, I would want Lord Denning to be the judge.

Sad, or what?

[anonymous-user]

Denning was a mixed bag, and stayed on too long, becoming gaga and racist in his old age. He was a mixture of moderniser and deep reactionary. He was not a trial Judge for long, as he spent most of his judicial career as an appellate Judge.

[julianc]

Breadvan72 said:

Denning was a mixed bag, and stayed on too long, becoming gaga and racist in his old age. He was a mixture of moderniser and deep reactionary. He was not a trial Judge for long, as he spent most of his judicial career as an appellate Judge.

BV, thanks for offering your opinion, which is interesting to a relative legal ignoramus such as myself (although I have regular discussions with commercial lawyers).

[Actus Reus]

What happens, BV, if a client REALLY wants to follow the employee who is subject to restriction - must they obtain consent from the former employer, and can they reasonably withold that consent? I would be most upset if I couldn't appoint a solicitor of my choosing, if a prior employer of his forbade him from taking instructions from me.

As to Denning, he just conjures up fond memories of law libraries in Lancashire on rainy Tuesday afternoons.

[Twilkes]

Breadvan72 said:

There is an argument that signing up to an unreasonable clause is better than signing up to a reasonable one, because the unreasonable one is not likely to be enforced, but I don't advise that, as you never know what might happen, and sometimes Judges get things wrong (I mentioned Scully v Lee above - a case in which the trial Judge wrongly clobbered my employee client on an unreasonable clause, and I had to go to the Court of Appeal to get him out).

In this case, or similar ones where an unreasonable judgement is overturned, is there any mechanism for the unreasonably judged to claim back their costs of having to go through an appeal due to the unreasonable judge?

[SpeckledJim]

Breadvan72 said:

I am not King, nor likely to become so

Can't never could.

[anonymous-user]

Twilkes said:

In this case, or similar ones where an unreasonable judgement is overturned, is there any mechanism for the unreasonably judged to claim back their costs of having to go through an appeal due to the unreasonable judge?

In civil litigation in England and Wales, the general rule is that the loser pays the other side's costs (or at least most of the costs). If you lose at trial and win on appeal, the other side usually has to pay the costs of the trial and of the appeal. The risk that a Judge will make an incorrect decision that is successfully appealed from is one of the risks of litigation. Judges are human and thus fallible (although they are more often right than wrong). That is why we have an appeal system. The Court itself does not pay costs for judicial errors.

[anonymous-user]

Actus Reus said:

What happens, BV, if a client REALLY wants to follow the employee who is subject to restriction - must they obtain consent from the former employer, and can they reasonably withold that consent? I would be most upset if I couldn't appoint a solicitor of my choosing, if a prior employer of his forbade him from taking instructions from me.

As to Denning, he just conjures up fond memories of law libraries in Lancashire on rainy Tuesday afternoons.

Tough luck on the client if the clause is otherwise enforceable. Don't shoot me, I don't make the rules!

Can there really be any fond memories associated with law libraries, or Lancashire for that matter?

[anonymous-user]

julianc said:

...I have regular discussions with commercial lawyers).

Unlucky you!