Help: employment law and non-compete
Discussion
As an aside, what force would a covenant have if the former employee, instead of entering into an employee-employer relationship in their next job, became an independent contractor and it went the usual way of contractor arrangements, that is end client has contract with recruitment agent, LTD company (of which former employee is a director has) contract with recruitment agent?
Breadvan72 said:
Twelve month non compete clauses are routinely enforced these days, often against not very senior employees.
That's surprising. Why don't such clauses fall foul of EU competition law? I am thinking of article 101.EU said:
The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market.
ORD said:
Interesting and complex relationship between restraint of trade and competition laws.... But doesn't really arise here. The OP is an employee, rather than an 'undertaking' (so not covered by Article 101 TFEU or the Chapter I Prohibition in domestic law).
If a company wishes to enter a particular market but cannot do so because it can't employ anyone with the required skill set due to all potential employees having non compete clauses in their current employment contracts then surely that would breach the competition laws? 
Thanks for all the posts so far.
Nothing much to report as yet, I've been doing a lot of reading, research and discussing things with my potentially-next employer.
I have yet to reach out to a solicitor directly since my future employer is seeking advice to fight my cause, so this can be a coordinated response to my ex-employers lawyers.
A friend of mine is offering impartial advice (studied / works in employment law) and a letter has been drafted up in preparation. There are several angles I can approach this situation from-
I understand that my employer must be looking to protect an LBI (Legitimate Business Interest) in order to enforce a non-compete covenant.
The LBI identified in my letter circulates around one particular customer, with whom the company had an annual supply agreement. I absorbed this customer when a colleague left the company abruptly earlier in the year (alarm bells). Interestingly, it is claimed that I have sensitive and confidential information as well as a direct contact / relationship with this customer. I've met them on 4 occasions and had less than a dozen phone conversations and email exchanges. The sensitive information I'm deemed to have been exposed to is simply forecasts of supply requirements for what is a leading housebuilding company (unsurprisingly, building lots of houses requires lots of doors - duh!). These are specified products and common knowledge. I can't see how this is something they would need to seek to protect when an agreement has already been signed?
Furthermore, I had no real 'control' over this customers account, I merely oversaw orders and tried to assist with concerns and problems. It must be relevant that this customer was long established with my previous employer long before my time with the company began?
The second LBI listed is reference to the sensitive pricing information I have been exposed to / potentially am in possession of. Now, this is a big company distributing products nationally which has a full and comprehensive price list available at merchant counters or indeed for download from their own website. It's information in the public domain, and I can't understand how this would possibly be justifiable??
Finally (sorry) there is something I've been made aware of which surrounds setting a precedence. As mentioned before, this role has a high turnover of employees for one reason or another, and I am not the first to have left in pursuit of work within the same industry. But I am the first to have my non-compete enforced.
Just this year (March) a salesmen left to join a far bigger company (with a far greater market share than the company I'm wanting to join) yet no such action was taken against him, despite the obvious direct competition links. It's flattering I suppose that they think I'm such a threat to future sales.
My start date has now been postponed until further notice, so as of Monday I'll be starting to lose out. I don't suppose there's a hope in hell I could sue for loss of earnings?
I'll keep the thread updated as things progress.
The overbearing factor for me is that I had fulfilled all of my contractual obligations and notified my employer of this job offer at the end of September (well within my probationary period). No correspondence whatsoever followed to suggest that they would seek to enforce an injunction. Suitably unreasonable was the MD's promises of expenses paid for my return journey on handover of my company car. I'll now have trust issues with anyone which I hold in a professional regard. The guy is a tw@t.
I've warned the other salesmen as I know they're all unhappy and have been to interviews for other roles. This alone should tell the company something, resolve the morale in the office instead of wasting money on this endeavour.
The saga continues...
Nothing much to report as yet, I've been doing a lot of reading, research and discussing things with my potentially-next employer.
I have yet to reach out to a solicitor directly since my future employer is seeking advice to fight my cause, so this can be a coordinated response to my ex-employers lawyers.
A friend of mine is offering impartial advice (studied / works in employment law) and a letter has been drafted up in preparation. There are several angles I can approach this situation from-
I understand that my employer must be looking to protect an LBI (Legitimate Business Interest) in order to enforce a non-compete covenant.
The LBI identified in my letter circulates around one particular customer, with whom the company had an annual supply agreement. I absorbed this customer when a colleague left the company abruptly earlier in the year (alarm bells). Interestingly, it is claimed that I have sensitive and confidential information as well as a direct contact / relationship with this customer. I've met them on 4 occasions and had less than a dozen phone conversations and email exchanges. The sensitive information I'm deemed to have been exposed to is simply forecasts of supply requirements for what is a leading housebuilding company (unsurprisingly, building lots of houses requires lots of doors - duh!). These are specified products and common knowledge. I can't see how this is something they would need to seek to protect when an agreement has already been signed?
Furthermore, I had no real 'control' over this customers account, I merely oversaw orders and tried to assist with concerns and problems. It must be relevant that this customer was long established with my previous employer long before my time with the company began?
The second LBI listed is reference to the sensitive pricing information I have been exposed to / potentially am in possession of. Now, this is a big company distributing products nationally which has a full and comprehensive price list available at merchant counters or indeed for download from their own website. It's information in the public domain, and I can't understand how this would possibly be justifiable??
Finally (sorry) there is something I've been made aware of which surrounds setting a precedence. As mentioned before, this role has a high turnover of employees for one reason or another, and I am not the first to have left in pursuit of work within the same industry. But I am the first to have my non-compete enforced.
Just this year (March) a salesmen left to join a far bigger company (with a far greater market share than the company I'm wanting to join) yet no such action was taken against him, despite the obvious direct competition links. It's flattering I suppose that they think I'm such a threat to future sales.
My start date has now been postponed until further notice, so as of Monday I'll be starting to lose out. I don't suppose there's a hope in hell I could sue for loss of earnings?
I'll keep the thread updated as things progress.
The overbearing factor for me is that I had fulfilled all of my contractual obligations and notified my employer of this job offer at the end of September (well within my probationary period). No correspondence whatsoever followed to suggest that they would seek to enforce an injunction. Suitably unreasonable was the MD's promises of expenses paid for my return journey on handover of my company car. I'll now have trust issues with anyone which I hold in a professional regard. The guy is a tw@t.
I've warned the other salesmen as I know they're all unhappy and have been to interviews for other roles. This alone should tell the company something, resolve the morale in the office instead of wasting money on this endeavour.
The saga continues...
Be prepared for the world of £250/hr+VAT letter writing and telephone calls, lawyering up gets very expensive very quickly. The last time I went through a similar process it cost me £5k per month every month until the court date got close, then the costs ramped up quite significantly.
plasticpig said:
Breadvan72 said:
Twelve month non compete clauses are routinely enforced these days, often against not very senior employees.
That's surprising. Why don't such clauses fall foul of EU competition law? I am thinking of article 101.EU said:
The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market.
creampuff said:
As an aside, what force would a covenant have if the former employee, instead of entering into an employee-employer relationship in their next job, became an independent contractor and it went the usual way of contractor arrangements, that is end client has contract with recruitment agent, LTD company (of which former employee is a director has) contract with recruitment agent?
If properly drafted, it will usually apply with full force. The covenant will be drafted so as to apply to whatever method the former employee uses to do the thing that the covenant restricts. It will apply whether he or she does that thing as employee, principal, contractor, or whatever, and whether by him or herself or through another or others. Edited by anonymous-user on Monday 2nd November 01:12
swerni said:
It is a double edged sword though.
Most people don't enforce covenants unless there is some extraordinary circumstance or compelling reason, would you not agree?
If an organisation gets reputation for trying to enforce, people are going to think twice about working there.
I'm in no way saying they won't, but it's a very shortsighted and childish thing to do for a low level employee.
I have no data by which to measure "most". When I go to Court to enforce one of these covenants, which I do maybe ten times a year, there are usually at least one or two other covenant cases lurking about the Court that day. The Court sits on maybe 200 days a year. Of my ten or so cases a year, maybe one or two will go to trial. The others settle. Most people don't enforce covenants unless there is some extraordinary circumstance or compelling reason, would you not agree?
If an organisation gets reputation for trying to enforce, people are going to think twice about working there.
I'm in no way saying they won't, but it's a very shortsighted and childish thing to do for a low level employee.
I only see the cases that I see, and have no idea how many covenants go unenforced, but my experience is that many employers are more than ready to enforce covenants. even against fairly low ranking employees. The pattern may vary from industry to industry, but covenants are regularly enforced in sectors such as financial services, investment baking, oil and gas, and IT. I am just helping to sign off on the third edition of my chambers' big fat book on this subject (working for OUP is like working for your mum, only worse). The index of cited cases is huge.
As for reputation, the point actually works the other way. Employers enforce their covenants to send messages to their staff and to their commercial rivals that the employer means business as is not to be f
ked with. As Voltaire noted when Byng was shot, from time to time the English kill an Admiral, to encourage the others. C.A.R. said:
A friend of mine is offering impartial advice (studied / works in employment law) and a letter has been drafted up in preparation.
...
I've warned the other salesmen as I know they're all unhappy and have been to interviews for other roles. This alone should tell the company something, resolve the morale in the office instead of wasting money on this endeavour.
A friend may mean to but rarely does offer impartial advice. He/she is your friend. It is almost always a bad idea to use a friend as a lawyer, doctor, accountant, car mechanic, builder, whatever. You may get a bad adviser and you may well lose a friend. Relying on the advice of "my friend who once did a law course or works in HR or something" is no substitute for listening to the advice of the lawyer that your proposed new employer instructs for you, if they do that. ...
I've warned the other salesmen as I know they're all unhappy and have been to interviews for other roles. This alone should tell the company something, resolve the morale in the office instead of wasting money on this endeavour.
Be careful what you say to other employees. Your contract may contain a clause banning you from encouraging colleagues to leave, and in general if the employer can characterise you as disloyal it may make something of that in its evidence, should the matter go to court.
Stop being emotional. This is business. Tony Soprano may have you murdered, even if he likes you as a person. It's business.
Edited by anonymous-user on Thursday 29th October 06:55
You have said that the outflow of people is regular that no one sticks the job - company may be getting peeved with this and is now looking to make an example....
You feel that you may not be privy to sensitive information - maybe you are doing the job well and this irks them to have to go through the process of filling the position and training the new guy all over again.....that may be the issue.
You mentioned that you are talking to others in the company - this alone may be causing big issues if you are seen to be causing issues they might want to come back as hard as they can and use every thing that they can to muster a response.
As said get proper advice - dont rely on friends or the like on this one as it can do you significant damage.
You feel that you may not be privy to sensitive information - maybe you are doing the job well and this irks them to have to go through the process of filling the position and training the new guy all over again.....that may be the issue.
You mentioned that you are talking to others in the company - this alone may be causing big issues if you are seen to be causing issues they might want to come back as hard as they can and use every thing that they can to muster a response.
As said get proper advice - dont rely on friends or the like on this one as it can do you significant damage.
OP, you have to date received quite bad legal advice from your friend. I second BV72's suggestion that you get a proper lawyer. Bad legal advice can be even worse than no advice: half-baked arguments will just annoy your ex-employer and cause its lawyers to be more bullish about pressing ahead with enforcing the clause.
As BV72 has said, it is not at all uncommon for the new employer to provide assistance to the employee in paying for legal advice and representation.
In my experience, these cases can turn quite nasty quite quickly. A decent barrister will be able to tell you whether the clause is likely to hold up, and a good solicitor would stand a good chance of negotiating exit terms.
As BV72 has said, it is not at all uncommon for the new employer to provide assistance to the employee in paying for legal advice and representation.
In my experience, these cases can turn quite nasty quite quickly. A decent barrister will be able to tell you whether the clause is likely to hold up, and a good solicitor would stand a good chance of negotiating exit terms.
ORD said:
As BV72 has said, it is not at all uncommon for the new employer to provide assistance to the employee in paying for legal advice and representation.
It's not uncommon, but nor is it cheap. I'd really have to want a particular employee before I'd take on the open ended commitment of funding their legal costs. The last one I fought, as an employer, settled out of court in my favour, the cost to the other side was >£100k including my settlement. Costs alone were >£30k each, and it isn't just the financial costs, I'd consider myself to be fairly tough but I found the whole process to be very traumatic.RYH64E said:
ORD said:
As BV72 has said, it is not at all uncommon for the new employer to provide assistance to the employee in paying for legal advice and representation.
It's not uncommon, but nor is it cheap. I'd really have to want a particular employee before I'd take on the open ended commitment of funding their legal costs. The last one I fought, as an employer, settled out of court in my favour, the cost to the other side was >£100k including my settlement. Costs alone were >£30k each, and it isn't just the financial costs, I'd consider myself to be fairly tough but I found the whole process to be very traumatic.One thing is for certain, though - the new employer is more likely to be able to spend enough to get a good result than is the OP on his own.
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