Help: employment law and non-compete
Discussion
Breadvan72 said:
There is a line, often difficult to draw, between what an employee carries in his or her head as part of his or her stock in trade, acquired over time spent working in a particular type of work, and information that is proprietary to the employer. The latter class of information cannot be used after employment even if it can be carried away in the employee's head and without copying of records.
A sales person may, in even a short period of work, gain knowledge of information about a business that is not simply generic business info, and is info which a competitor would find valuable, even if the info has a shelf life. The employee may intend to act honourably, and the new employer may also not wish to grab the info, but because it can be hard to distinguish between info that is lawfully usable and that which is not, and because policing promises to keep secrets is hard, restrictive covenants sometimes apply to protect the confidential info.
BTW, OP, did you take any business records with you? I hope not. Bear in mind that if you made any copies or downloads, screen grabs etc, the employer will usually find out. Customer databases are often populated with false customers, to detect copying, and there are other and more sophisticated ways of detecting information theft. I am not saying that is you, OP, but it does happen (a lot).
I always assume that whoever leaves my company has already taken whatever they wanted before handing in their notice. A sales person may, in even a short period of work, gain knowledge of information about a business that is not simply generic business info, and is info which a competitor would find valuable, even if the info has a shelf life. The employee may intend to act honourably, and the new employer may also not wish to grab the info, but because it can be hard to distinguish between info that is lawfully usable and that which is not, and because policing promises to keep secrets is hard, restrictive covenants sometimes apply to protect the confidential info.
BTW, OP, did you take any business records with you? I hope not. Bear in mind that if you made any copies or downloads, screen grabs etc, the employer will usually find out. Customer databases are often populated with false customers, to detect copying, and there are other and more sophisticated ways of detecting information theft. I am not saying that is you, OP, but it does happen (a lot).
I'm not a business owner, just a faceless number in a massive multinational though.
Bloke in pub wisdom, often retailed here, is that every employee can help him or herself to anything he or she likes from the database, nick the customers, and so on, and that the employer can do nothing about this. Some employees get into bother because they believe that line. Some do get away with it, of course, because the employer is slow on the uptake, under funded, gets bad advice, or just decides that the game is not worth the candle, and some employers have old fashioned and badly drafted covenants that they cannot enforce when push comes to shove.
Breadvan72 said:
Twelve month non compete clauses are routinely enforced these days, often against not very senior employees.
We don't have all the facts but on the facts that we do have, 12 months for a sales manager sounds a bit restraint-of-tradey to me. Also it sounds like a very widely defined business. In Ashcourt Rowan Financial Planning Ltd v Hall [2013] EWHC 1185 (QB) the following restriction was deemed to be invalid as it was too wide (ie did not protect a legitimate business interest):
"either alone or jointly with or as employee, manager, officer, director, agent, consultant, contractor or partner of any other person, firm, company or organisation directly or indirectly be engaged or concerned in any business or activity which competes directly with the Business and with which Business you have been concerned in the performance of your duties ... during the 12 months immediately preceding the termination date."
"Business" was defined as any business of or commercial activity carried on by the employer or any Associated Company as at the termination
None of this means that you shouldn't get proper insured advice asap, but my 2 cents is that this sounds unenforceable.
Ashcourt Rowan was an interlocutory (not trial) decision on a badly drafted covenant and turned on its own particular circumstances. Covenants of similar scope and duration have been enforced at trial, for example in Hyprotech v Frankum in February 2015, and see also the Commonwealth and British case from a few years back.
I am not sure if the OP has told us the precise wording of his covenant. It might be on one of the pages above, but I am too idle to check. I offered to have a gander at it for him, but he didn't take up the offer as he has a pal (credentials unknown) who is advising him.
I am not sure if the OP has told us the precise wording of his covenant. It might be on one of the pages above, but I am too idle to check. I offered to have a gander at it for him, but he didn't take up the offer as he has a pal (credentials unknown) who is advising him.
OutOfSync said:
...but my 2 cents is that this sounds unenforceable.
However, with respect, an opinion of whether a contractual term is enforceable without any sight of what it says is worth even less than 2 cents. That's not to say that the OP's mate or the company solicitors may find a point of argument, however, none of that really helps the OP:
Play out the possible best case scenarios:
1) Mate says, "You're OK here, start work." Is he really safe?
2) Company solicitors say, "In our opinion X, however, we represent ABC Doors, you should get your own advice." Is he really safe to start?
Even in the best case scenarios here, that point is only going to be got to for a few weeks. OP's losing out on work every week.
Then use game theory to work out what the old employer will likely do next:
At the moment, they have more than an inkling that their business will be damaged through the breach. What do they think if the OP and employer starts investing money to find a 'get out'?
The answer is that the old manufacturer now knows that the competitor believes that getting the OP must be worth spending thousands on legal costs. That simply reinforces the idea of the possibility that the competitor is trying to seek a possible advantage to the detriment to the old employer.
They will likely escalate, not back down.
If I were in the shoes of the OP, I would be looking for a job which does not breach the covenant pronto, as this should be the default position unless some kind of awesome (and unlikely) rapid settlement takes place.
Edited by JustinP1 on Tuesday 3rd November 12:40
Surely this type of competition clause only applies when the 'ex' employee starts calling his old clients from his new employer.
Stay away from your old client base and ex employer can't claim any financial loss.
However, do what many attempt by asking old clients to follow and you risk the wrath of a potential injunction if it can be proven / demonstrated.
I have always understood the courts apply some discretion in these types of cases, so it's not always clear which way it can go.
Stay away from your old client base and ex employer can't claim any financial loss.
However, do what many attempt by asking old clients to follow and you risk the wrath of a potential injunction if it can be proven / demonstrated.
I have always understood the courts apply some discretion in these types of cases, so it's not always clear which way it can go.
You appear to be confusing a non solicit or non deal clause with a non compete clause. Non solicits and non deals are easier to uphold than non competes, but in some cases, because of the confidential information at stake, a non compete can be justified. This means that the ex employee cannot work for a competing business at all, for a limited period of time. Some clauses even identify particular companies that the employee cannot work for. Others identify a business sector.
All cases turn on their own facts, all injunctions are discretionary, and outcomes in any litigation are uncertain. The problem here is that the OP is ignoring all suggestions that he takes insured advice specific to his situation. He is still seeking advice here, which can only be rather general advice and isn't insured, and is being advised by a friend who may or may not have relevant experience. The OP is not being advised by his proposed new employer's solicitors. There is probably no point saying this again, but I will say it anyway - the OP needs to obtain insured legal advice asap.
All cases turn on their own facts, all injunctions are discretionary, and outcomes in any litigation are uncertain. The problem here is that the OP is ignoring all suggestions that he takes insured advice specific to his situation. He is still seeking advice here, which can only be rather general advice and isn't insured, and is being advised by a friend who may or may not have relevant experience. The OP is not being advised by his proposed new employer's solicitors. There is probably no point saying this again, but I will say it anyway - the OP needs to obtain insured legal advice asap.
OutOfSync said:
You're right of course, Justin, but where's the fun in sitting on the fence in a forum? 
BV if you like please PM your name/chambers. I have clients who get into this sort of scrape from time to time and it's not really my area so it's good to have a known quantity to instruct.
His quantity is both known and considerable, especially for someone who fits into such small cars.BV if you like please PM your name/chambers. I have clients who get into this sort of scrape from time to time and it's not really my area so it's good to have a known quantity to instruct.
Out of interest, what is the position of a company who employs somebody who is subject to a restrictive covenant? Are they also liable or is it just the employee who could get in trouble?
In the only such case I've been involved in the employing company was 'joined in', I'm not sure what that meant or why it was possible to do so, but they sent two sets of barrister/solicitor combos to various hearings which doubled up their costs.
In the only such case I've been involved in the employing company was 'joined in', I'm not sure what that meant or why it was possible to do so, but they sent two sets of barrister/solicitor combos to various hearings which doubled up their costs.
The new employer is sometimes sued for inducing breach of contract and/or for knowing receipt of confidential information or breach of database rights, depending pn the evidence. I generally discourage my claimant clients from suing the new employer, as inducement is a tort of intention and hard to prove, the new company is usually engaged by proxy anyway, and it reduces cost risk and procedural blah if you just sue the employee. The new employer will be bound by any injunction of which it has notice anyway. More often that not the new employer bankrolls the employee's defence, but not always. Thus far the OP is out in the cold, with only his friend and some random internet dudes to help him, which is not good.
Edited by anonymous-user on Tuesday 3rd November 18:49
OK, response letter sent today - here's hoping we get a response before long.
With regards to precise wording, I have nothing to hide and the contract isn't marked as being confidential, so I'll copy/paste the extracts which apply below-
Now, here also is the letter from my previous employers' lawyer, which I have edited to protect identities etc.
XYZ Ltd - previous employer (enforcing non-compete)
ABC Ltd - new employer (with hope, eventually)
Housebuilder X - large London-based housebuilding company
Under the legal advice which I received I have not and will not be signing and returning the above statement as requested. I am also not obliged to provide them with any of the communications between me and company ABC Ltd, even though it would reveal just how cautious and sensitive I went about seeking their employment.
As stated at the top, a response has been penned by ABC Ltds' solicitors and will be with XYZs' solicitors today, a copy of which I'll upload in a similar manner at a later date. Or at least after dinner.
With regards to precise wording, I have nothing to hide and the contract isn't marked as being confidential, so I'll copy/paste the extracts which apply below-
Contract said:
Interperetation
Confidential Information: information in whatever form (including, without limitation, in written, oral, visual or electronic form or on any magnetic or optical disk or memory and wherever located) relating to the business, clients, customers, products, affairs and finances of the Company or any Group Company for the time being confidential to the Company or any Group Company and trade secrets including, without limitation, technical data and know-how relating to the business of the Company or of any Group Company or any of its suppliers, clients, customers, agents, distributors, shareholders or management that the Employee creates, develops, receives or obtains in connection with the Appointment, whether or not such information (if in anything other than oral form) is marked confidential.
Restricted Business: those parts of the business of the Company and any Group Company with which the Employee was involved to a material extent in the 12 months before Termination.
Restricted Customer: any firm, company or person who, during the 12 months before Termination, was a customer or prospective customer of or in the habit of dealing with the Company or any Group Company with whom the Employee had contact or about whom he became aware or informed of in the course of his employment.
Restricted Person: anyone employed or engaged by the Company or any Group Company who could materially damage the interests of the Company or any Group Company if they were involved in any Capacity in any business concern which competes with any Restricted Business and with whom the Employee dealt in the 12 months before Termination in the course of his employment.
Confidential Information: information in whatever form (including, without limitation, in written, oral, visual or electronic form or on any magnetic or optical disk or memory and wherever located) relating to the business, clients, customers, products, affairs and finances of the Company or any Group Company for the time being confidential to the Company or any Group Company and trade secrets including, without limitation, technical data and know-how relating to the business of the Company or of any Group Company or any of its suppliers, clients, customers, agents, distributors, shareholders or management that the Employee creates, develops, receives or obtains in connection with the Appointment, whether or not such information (if in anything other than oral form) is marked confidential.
Restricted Business: those parts of the business of the Company and any Group Company with which the Employee was involved to a material extent in the 12 months before Termination.
Restricted Customer: any firm, company or person who, during the 12 months before Termination, was a customer or prospective customer of or in the habit of dealing with the Company or any Group Company with whom the Employee had contact or about whom he became aware or informed of in the course of his employment.
Restricted Person: anyone employed or engaged by the Company or any Group Company who could materially damage the interests of the Company or any Group Company if they were involved in any Capacity in any business concern which competes with any Restricted Business and with whom the Employee dealt in the 12 months before Termination in the course of his employment.
Contract said:
17. POST-TERMINATION RESTRICTIONS
17.1 In order to protect the Confidential Information and business connections of the Company and each Group Company to which he has access as a result of the Employment, the Employee covenants with the Company (for itself and as trustee and agent for each Group Company) that he shall not:
(a) for twelve months after Termination, solicit or endeavour to entice away from the Company or any Group Company the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business;
(b) for twelve months after Termination in the course of any business concern which is in competition with any Restricted Business, offer to employ or engage or otherwise endeavour to entice away from the Company or any Group Company any Restricted Person;
(c) for twelve months after Termination, be involved in any Capacity with any business concern which is (or intends to be) in competition with any Restricted Business;
(d) for twelve months after Termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business; or
(e) at any time after Termination, represent himself as connected with the Company or any Group Company in any Capacity.
17.2 None of the restrictions in clause 17.1 shall prevent the Employee from:
(a) holding an investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognised stock exchange; or
(b) being engaged or concerned in any business concern insofar as the Employee's duties or work shall relate solely to geographical areas where the business concern is not in competition with any Restricted Business; or
(c) being engaged or concerned in any business concern, provided that the Employee's duties or work shall relate solely to services or activities of a kind with which the Employee was not concerned to a material extent in the 12 months before Termination.
17.3 The restrictions imposed on the Employee by this clause 17 apply to him acting:
(a) directly or indirectly; and
(b) on his own behalf or on behalf of, or in conjunction with, any firm, company or person.
17.4 The period for which the restrictions in clause 17 apply shall be reduced by any period that the Employee spends on Garden Leave immediately before Termination.
17.5 If the Employee receives an offer to be involved in a business concern in any Capacity during the Employment, or before the expiry of the last of the covenants in this clause 17, the Employee shall give the person making the offer a copy of this clause 17 and shall tell the Company the identity of that person as soon as possible after accepting the offer.
17.6 If, at any time during the Employee's employment, two or more Restricted Persons have left their employment, appointment or engagement with the Company to perform Restricted Business for a business concern which is, or intends to be, in competition with any Restricted Business, the Employee will not at any time during the twelve months following the last date on which any of those Restricted Persons were employed or engaged by the Company, be employed or engaged in any way with that business concern under which the Employee will perform Restricted Business on the behalf of that business concern.
17.7 Each of the restrictions in this clause 17 is intended to be separate and severable. If any of the restrictions shall be held to be void but would be valid if part of their wording were deleted, such restriction shall apply with such deletion as may be necessary to make it valid or effective.
17.8 The Employee will, at the request and expense of the Company, enter into a separate agreement with any Group Company in which he agrees to be bound by restrictions corresponding to those restrictions in this clause 17 (or such of those restrictions as may be appropriate) in relation to that Group Company.
Now that seems far too generic to me, but IANAL and all that.17.1 In order to protect the Confidential Information and business connections of the Company and each Group Company to which he has access as a result of the Employment, the Employee covenants with the Company (for itself and as trustee and agent for each Group Company) that he shall not:
(a) for twelve months after Termination, solicit or endeavour to entice away from the Company or any Group Company the business or custom of a Restricted Customer with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business;
(b) for twelve months after Termination in the course of any business concern which is in competition with any Restricted Business, offer to employ or engage or otherwise endeavour to entice away from the Company or any Group Company any Restricted Person;
(c) for twelve months after Termination, be involved in any Capacity with any business concern which is (or intends to be) in competition with any Restricted Business;
(d) for twelve months after Termination, be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business; or
(e) at any time after Termination, represent himself as connected with the Company or any Group Company in any Capacity.
17.2 None of the restrictions in clause 17.1 shall prevent the Employee from:
(a) holding an investment by way of shares or other securities of not more than 5% of the total issued share capital of any company, whether or not it is listed or dealt in on a recognised stock exchange; or
(b) being engaged or concerned in any business concern insofar as the Employee's duties or work shall relate solely to geographical areas where the business concern is not in competition with any Restricted Business; or
(c) being engaged or concerned in any business concern, provided that the Employee's duties or work shall relate solely to services or activities of a kind with which the Employee was not concerned to a material extent in the 12 months before Termination.
17.3 The restrictions imposed on the Employee by this clause 17 apply to him acting:
(a) directly or indirectly; and
(b) on his own behalf or on behalf of, or in conjunction with, any firm, company or person.
17.4 The period for which the restrictions in clause 17 apply shall be reduced by any period that the Employee spends on Garden Leave immediately before Termination.
17.5 If the Employee receives an offer to be involved in a business concern in any Capacity during the Employment, or before the expiry of the last of the covenants in this clause 17, the Employee shall give the person making the offer a copy of this clause 17 and shall tell the Company the identity of that person as soon as possible after accepting the offer.
17.6 If, at any time during the Employee's employment, two or more Restricted Persons have left their employment, appointment or engagement with the Company to perform Restricted Business for a business concern which is, or intends to be, in competition with any Restricted Business, the Employee will not at any time during the twelve months following the last date on which any of those Restricted Persons were employed or engaged by the Company, be employed or engaged in any way with that business concern under which the Employee will perform Restricted Business on the behalf of that business concern.
17.7 Each of the restrictions in this clause 17 is intended to be separate and severable. If any of the restrictions shall be held to be void but would be valid if part of their wording were deleted, such restriction shall apply with such deletion as may be necessary to make it valid or effective.
17.8 The Employee will, at the request and expense of the Company, enter into a separate agreement with any Group Company in which he agrees to be bound by restrictions corresponding to those restrictions in this clause 17 (or such of those restrictions as may be appropriate) in relation to that Group Company.
Now, here also is the letter from my previous employers' lawyer, which I have edited to protect identities etc.
XYZ Ltd - previous employer (enforcing non-compete)
ABC Ltd - new employer (with hope, eventually)
Housebuilder X - large London-based housebuilding company
Non Compete Letter said:
OUR CLIENT: XYZ LTD
We are instructed by XYZ Ltd of {company address removed} regarding your proposed employment by ABC Ltd following your resignation from our client on 29th September 2015.
You were employed by XYZ Ltd as Specification Sales Person and were in effect XYZ's
Area Sales Manager for London and the Southeast. You were the main point of contact between XYZ and most of its customers in your area. You also had a particularly important relationship with Housebuilder X for that companys requirements nationwide. Accordingly you have knowledge of the requirements of XYZ's customers including Housebuilder Xs' requirements for the next twelve months. You also have full information as to all of XYZ's costs and pricing structures for its products, not only for your own area but nationwide. The contacts and information you have as a result of your employment by XYZ are obviously highly sensitive and valuable to XYZ and would also be extremely valuable to XYZ's competitors. Use of such contacts and/or information by a competitor carries obvious risk of serious damage to XYZ's business interests.
You remain subject to obligations to XYZ Ltd as set out in your contract of employment (Contract) dated 9th March 2015, a copy of which we enclose.
This letter is being sent to you in accordance with the Practice Direction on Pre-action Conduct and Protocols (PDPACP) contained in the Civil Procedure Rules (CPR). In particular, we refer you to paragraph 4 of the PDPACP concerning the court's powers to impose sanctions for failing to comply with its provisions. Ignoring this letter may lead to our client commencing proceedings against you and may increase your liability for costs
YOUR OBLIGATIONS TO XYZ LTD
As you should already be aware, you are under the following contractual obligations:
{Contract extracts removed as quoted above}
You also have a common law duty of confidentiality to XYZ Ltd.
BREACH OF OBLIGATIONS
You have informed our client that you intend to take up employment with ABC Ltd. This company is a competitor with XYZ Ltd including (but not necessarily only) in regard to supply of door sets and other products marketed by XYZ to the same customer base that you have been dealing with during your employment with XYZ. This is business with which you have been involved to a material extent in the last twelve months. It is "Restricted Business" as defined in your Contract.
Your employment with ABC Ltd is also highly likely to involve use of Confidential Information both as defined in your Contract and/or at common law. It is highly likely to lead to a breach of your obligations of confidentiality to our client pursuant to your Contract and/or at common law.
Please note that our client's investigations are ongoing.
We refer you to the restrictive covenants at clause 17 of your Contract. Your employment by ABC Ltd in a competitive role would be a breach of this clause. You have not been released, and will not be released, by XYZ Ltd from the terms of your Contract.
CONTRACTUAL UNDERTAKINGS
XYZ Ltd therefore requires you to give undertakings in the form attached. Unless these undertakings are received by 4pm on November 2015, our client will have no alternative but to consider appropriate action to protect its interests, including an application to the court for immediate relief and its legal costs, without further notice to you.
RELEVANT DOCUMENTS
You are reminded that under your Contract all Confidential Information and copies thereof are the property of XYZ Ltd and you are obliged upon request to hand over the same of XYZ Ltd and also to irretrievably delete any confidential information stored on any magnetic or optical disk or memory, including personal computer networks, personal email accounts or personal accounts on websites, and all matter derived from such sources which is in your possession or under your control outside the Company's premises. You are hereby requested to comply with these obligations.
In accordance with the PDPACP contained in the Civil Procedure Rules (CPR), please provide to us by 4pm on November 2015 copies of the following documents, which are relevant to this matter and are likely to be in your possession or control:
All communications between yourself and ABC Ltd
This does not purport to be an exhaustive list of relevant documents.
You SHOULD TAKE LEGAL ADVICE
You should take legal advice on this letter as a matter of urgency.
We await hearing from you by 4pm on 4th November 2015. In the meantime, all of our client's rights are reserved.
Yours faithfully
XYZ's Solicitors LLP
Letter which was attached and was requested to be signed and returned -We are instructed by XYZ Ltd of {company address removed} regarding your proposed employment by ABC Ltd following your resignation from our client on 29th September 2015.
You were employed by XYZ Ltd as Specification Sales Person and were in effect XYZ's
Area Sales Manager for London and the Southeast. You were the main point of contact between XYZ and most of its customers in your area. You also had a particularly important relationship with Housebuilder X for that companys requirements nationwide. Accordingly you have knowledge of the requirements of XYZ's customers including Housebuilder Xs' requirements for the next twelve months. You also have full information as to all of XYZ's costs and pricing structures for its products, not only for your own area but nationwide. The contacts and information you have as a result of your employment by XYZ are obviously highly sensitive and valuable to XYZ and would also be extremely valuable to XYZ's competitors. Use of such contacts and/or information by a competitor carries obvious risk of serious damage to XYZ's business interests.
You remain subject to obligations to XYZ Ltd as set out in your contract of employment (Contract) dated 9th March 2015, a copy of which we enclose.
This letter is being sent to you in accordance with the Practice Direction on Pre-action Conduct and Protocols (PDPACP) contained in the Civil Procedure Rules (CPR). In particular, we refer you to paragraph 4 of the PDPACP concerning the court's powers to impose sanctions for failing to comply with its provisions. Ignoring this letter may lead to our client commencing proceedings against you and may increase your liability for costs
YOUR OBLIGATIONS TO XYZ LTD
As you should already be aware, you are under the following contractual obligations:
{Contract extracts removed as quoted above}
You also have a common law duty of confidentiality to XYZ Ltd.
BREACH OF OBLIGATIONS
You have informed our client that you intend to take up employment with ABC Ltd. This company is a competitor with XYZ Ltd including (but not necessarily only) in regard to supply of door sets and other products marketed by XYZ to the same customer base that you have been dealing with during your employment with XYZ. This is business with which you have been involved to a material extent in the last twelve months. It is "Restricted Business" as defined in your Contract.
Your employment with ABC Ltd is also highly likely to involve use of Confidential Information both as defined in your Contract and/or at common law. It is highly likely to lead to a breach of your obligations of confidentiality to our client pursuant to your Contract and/or at common law.
Please note that our client's investigations are ongoing.
We refer you to the restrictive covenants at clause 17 of your Contract. Your employment by ABC Ltd in a competitive role would be a breach of this clause. You have not been released, and will not be released, by XYZ Ltd from the terms of your Contract.
CONTRACTUAL UNDERTAKINGS
XYZ Ltd therefore requires you to give undertakings in the form attached. Unless these undertakings are received by 4pm on November 2015, our client will have no alternative but to consider appropriate action to protect its interests, including an application to the court for immediate relief and its legal costs, without further notice to you.
RELEVANT DOCUMENTS
You are reminded that under your Contract all Confidential Information and copies thereof are the property of XYZ Ltd and you are obliged upon request to hand over the same of XYZ Ltd and also to irretrievably delete any confidential information stored on any magnetic or optical disk or memory, including personal computer networks, personal email accounts or personal accounts on websites, and all matter derived from such sources which is in your possession or under your control outside the Company's premises. You are hereby requested to comply with these obligations.
In accordance with the PDPACP contained in the Civil Procedure Rules (CPR), please provide to us by 4pm on November 2015 copies of the following documents, which are relevant to this matter and are likely to be in your possession or control:
All communications between yourself and ABC Ltd
This does not purport to be an exhaustive list of relevant documents.
You SHOULD TAKE LEGAL ADVICE
You should take legal advice on this letter as a matter of urgency.
We await hearing from you by 4pm on 4th November 2015. In the meantime, all of our client's rights are reserved.
Yours faithfully
XYZ's Solicitors LLP
Letter Attachment said:
Undertakings by PH user C.A.R.
I PH user C.A.R. hereby undertake .
1. In reference to Confidential Information as defined in my Contract of Employment with XYZ Ltd dated March 2015 (my Contract):
a] Not to use any Confidential Information or make or use any Copies as defined in my Contract or to disclose any Confidential Information to any person, company or other organisation whatsoever (except as may be required by law).
b] To use my best endeavours to prevent the use or communication of any Confidential Information by any person, company or organisation (except as may be required by law).
c] To inform XYZ Ltd immediately on becoming aware, or suspecting, that any other person, company or organisation knows or has used any Confidential Information.
d] To immediately deliver to XYZ Ltd all Confidential Information or Copies in my possession or control.
e] To immediately and irretrievably delete any Confidential Information stored on any magnetic or optical disk or memory, including personal computer networks, personal email accounts or personal accounts on websites, and all matter derived from such sources which is in my possession or under my control outside the premises of XYZ Ltd and to provide a signed statement that I have done so.
2. Not to accept employment by ABC Ltd or any associated business entity and if such employment has already been accepted then to resign forthwith.
3. For twelve months after termination of my employment with XYZ Ltd not to solicit or endeavour to entice away from XYZ Ltd the business or custom of a Restricted Customer as defined in my Contract with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business as defined in my Contract.
4. For twelve months after termination of my employment XYZ not to be involved in any Capacity as defined in my Contract with any business concern which is (or intends to be) in competition with any Restricted Business.
5. For twelve months after termination of my employment with XYZ Ltd not to be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business.
6. Not to represent myself as connected with XYZ Ltd in any capacity
The twelve month period referred to in these undertakings is less any period of garden leave.
Sign and return
Now you have everything I have, so you can have a nice, long, boring read of it all!I PH user C.A.R. hereby undertake .
1. In reference to Confidential Information as defined in my Contract of Employment with XYZ Ltd dated March 2015 (my Contract):
a] Not to use any Confidential Information or make or use any Copies as defined in my Contract or to disclose any Confidential Information to any person, company or other organisation whatsoever (except as may be required by law).
b] To use my best endeavours to prevent the use or communication of any Confidential Information by any person, company or organisation (except as may be required by law).
c] To inform XYZ Ltd immediately on becoming aware, or suspecting, that any other person, company or organisation knows or has used any Confidential Information.
d] To immediately deliver to XYZ Ltd all Confidential Information or Copies in my possession or control.
e] To immediately and irretrievably delete any Confidential Information stored on any magnetic or optical disk or memory, including personal computer networks, personal email accounts or personal accounts on websites, and all matter derived from such sources which is in my possession or under my control outside the premises of XYZ Ltd and to provide a signed statement that I have done so.
2. Not to accept employment by ABC Ltd or any associated business entity and if such employment has already been accepted then to resign forthwith.
3. For twelve months after termination of my employment with XYZ Ltd not to solicit or endeavour to entice away from XYZ Ltd the business or custom of a Restricted Customer as defined in my Contract with a view to providing goods or services to that Restricted Customer in competition with any Restricted Business as defined in my Contract.
4. For twelve months after termination of my employment XYZ not to be involved in any Capacity as defined in my Contract with any business concern which is (or intends to be) in competition with any Restricted Business.
5. For twelve months after termination of my employment with XYZ Ltd not to be involved with the provision of goods or services to (or otherwise have any business dealings with) any Restricted Customer in the course of any business concern which is in competition with any Restricted Business.
6. Not to represent myself as connected with XYZ Ltd in any capacity
The twelve month period referred to in these undertakings is less any period of garden leave.
Sign and return
Under the legal advice which I received I have not and will not be signing and returning the above statement as requested. I am also not obliged to provide them with any of the communications between me and company ABC Ltd, even though it would reveal just how cautious and sensitive I went about seeking their employment.
As stated at the top, a response has been penned by ABC Ltds' solicitors and will be with XYZs' solicitors today, a copy of which I'll upload in a similar manner at a later date. Or at least after dinner.
A quick view, OP. IAAL but IANYL. The non solicitation and non dealing clauses look enforceable to me. The non compete is on the full side, BUT if the employer can put together a credible case that it has some identifiable confidential info and you have knowledge of that, then the non compete will be arguably enforceable.
At the interim stage, the Court will simply look to see if there is an issue to be tried, and is likely to direct a speedy trial (this trial will usually happen within about two months of the start of the claim).
At the interim stage, the court will consider whether damages could be an adequate remedy for the employer. Probably not, because damages would be hard to calculate and you probably couldn't meet a substantial damages award.
Then the Court will weigh the balance of relative fairness and unfairness. That balance usually favours the employer.
The claimant should produce a recent balance sheet or other evidence of assets to show that it is good for its undertaking as to damages. What that means is that the Court requires a claimant who obtains an interim injunction to promise to compensate the defendant if it later turns out that the injunction was wrongly granted and this causes the defendant measurable loss. Note that the mere fact that the claimant loses at trial, if it does, will not by itself trigger liability in the damages undertaking.
In other words, OP, you are at risk. Your friend who is advising you sounds like he knows little about litigation. You will have to disclose your correspondence with the proposed new employer. Also, you should not simply ignore the request for undertakings. You should consider what undertakings you could sensibly give. If the new employer's lawyers will not advise you at this stage, then you would be better off thanking your friend politely and hiring a specialist adviser. Your friend means well, but it does not sound to me like he or she is the right horse for the course. You could lose that friend if you continue using him or her as your lawyer. Would you be willing to sue the friend if the advice given is badly wrong? Probably not. If the company lawyers will take up the cudgels for you, all well and good. Take their advice if they appear to be competent. I won't armchair quarterback them unless you tell me that they are suggesting something that sounds crazy.
At the interim stage, the Court will simply look to see if there is an issue to be tried, and is likely to direct a speedy trial (this trial will usually happen within about two months of the start of the claim).
At the interim stage, the court will consider whether damages could be an adequate remedy for the employer. Probably not, because damages would be hard to calculate and you probably couldn't meet a substantial damages award.
Then the Court will weigh the balance of relative fairness and unfairness. That balance usually favours the employer.
The claimant should produce a recent balance sheet or other evidence of assets to show that it is good for its undertaking as to damages. What that means is that the Court requires a claimant who obtains an interim injunction to promise to compensate the defendant if it later turns out that the injunction was wrongly granted and this causes the defendant measurable loss. Note that the mere fact that the claimant loses at trial, if it does, will not by itself trigger liability in the damages undertaking.
In other words, OP, you are at risk. Your friend who is advising you sounds like he knows little about litigation. You will have to disclose your correspondence with the proposed new employer. Also, you should not simply ignore the request for undertakings. You should consider what undertakings you could sensibly give. If the new employer's lawyers will not advise you at this stage, then you would be better off thanking your friend politely and hiring a specialist adviser. Your friend means well, but it does not sound to me like he or she is the right horse for the course. You could lose that friend if you continue using him or her as your lawyer. Would you be willing to sue the friend if the advice given is badly wrong? Probably not. If the company lawyers will take up the cudgels for you, all well and good. Take their advice if they appear to be competent. I won't armchair quarterback them unless you tell me that they are suggesting something that sounds crazy.
Edited by anonymous-user on Tuesday 3rd November 21:27
C.A.R. said:
Under the legal advice which I received ... I am also not obliged to provide them with any of the communications between me and company ABC Ltd ....
This, I am afraid, suggests that your friend is probably not up to the job. A competent litigator would advise you that you do have to disclose key documents in accordance with the Civil Procedure Rules Practice Direction on pre action conduct. Well, I'll reiterate that the information being fed to me via my old friend is advice that has served to reassure me and is completely off the record, even though he is qualified in whatever field it is which this relates to (please excuse my ignorance!). I have not, and will not act on any of this advice.
The other advice I have sought so far has been via company ABCs Solicitors, who did also state that they would expect to act on my behalf if this continued. In my financial position I saw little more to gain from seeking my own direct advice when this has been provided for me by company ABC, especially if it is something which I wish (at this stage at least) for company ABC and XYZ to resolve amicably between themselves so I can begin my employment with company ABC.
Now, to break down their letter a little bit -
As much as I'd love to send a response like that to my previous employer, that is not what has been provided. I will upload a copy [edited] of this response letter tomorrow for those interested.
The other advice I have sought so far has been via company ABCs Solicitors, who did also state that they would expect to act on my behalf if this continued. In my financial position I saw little more to gain from seeking my own direct advice when this has been provided for me by company ABC, especially if it is something which I wish (at this stage at least) for company ABC and XYZ to resolve amicably between themselves so I can begin my employment with company ABC.
Now, to break down their letter a little bit -
Legal letter said:
You were the main point of contact between XYZ and most of its customers in your area.
False. I had no customer database insofar as contact details / addresses / individuals. All that has been provided to me since I began my employment was a list of customers and account numbers nationwide, some of which were obsolete. It was less of a tool for obtaining details as it was to check whether someone already had an account or not. I don't have a copy of this available to me any more (to be honest, it was so poorly written it wasn't worth nicking for any purpose anyway).Legal letter said:
You also had a particularly important relationship with Housebuilder X for that companys requirements nationwide.
Double False. I absorbed this customer after the salesman previously looking after the account suddenly quit his job in June 2015. Upon which I met with this customer only twice during my employment. Another false statement would be knowledge of their requirements nationwide - company XYZ don't deal with Housebuilder X nationwide, it is restricted to the London area. I have seen this information, yes, however it is common sense that a large housebuilder in the capital is going to require lots of doors. Knowledge of exactly how many is irrelevant. Again, I have not got access to this information any longer, and I cannot see what possible use it would have been to me in the future regardless.Legal letter said:
Accordingly you have knowledge of the requirements of XYZ's customers including Housebuilder Xs' requirements for the next twelve months.
As before, yes, lots of doors. Obviously. These are specified products under an annual supply contract which company XYZ signed up to, so unless they are freely admitting that they are unlikely to be able to service this level of commitment and are already in fear of the competition, then they should have no concerns until at least the end of 2016 when this contract has expired. Further evidence that I was not managing this account would be that I was not privvy to this email correspondence in setting up this contract / supply commitment, but did compose the email - because my MD and the Commercial Director did not have the competance to write such a response. My draft of this email was then underwritten by my MD and I was excluded from the outgoing communications. I was therefore just an intermediary dealing with Housebuilder X's account, rather than managing it.Legal letter said:
You also have full information as to all of XYZ's costs and pricing structures for its products, not only for your own area but nationwide.
One would assume this refers to the account database mentioned above. However, pricing of company XYZ's products is public knowledge and can be downloaded without registration at their own website, or obtained in hardcopy from a local builders merchant. Knowing what discount each customer was entitled to (and remembering it) is hardly confidential and furthermore it is naturally consistent with discount structures for other products in the building industry insofar as merchants receiving greater discounts than contractors / end users. It is not and should not be considered confidential information. Legal letter said:
The contacts and information you have as a result of your employment by XYZ are obviously highly sensitive and valuable to XYZ and would also be extremely valuable to XYZ's competitors. Use of such contacts and/or information by a competitor carries obvious risk of serious damage to XYZ's business interests.
I met very few 'new' contacts in my time with company XYZ, many customers I had an existing knowledge of from my employment in the last 7 years within the industry. Those which have been identified as 'sensitive' (ie. Housebuilder X) I am happy to avoid direct communication with for the next 12 months as I do not feel this would prevent me from being able to function in my new role. However, aside from Housebuilder X, company XYZ has not identified which other customers it sees as being sensitive / valuable, and it would be impertinent to consider all customers within company XYZ's account database as being as such. I would also not be aware of this group of "protected" customers without company XYZ first providing me with a list of their details. As much as I'd love to send a response like that to my previous employer, that is not what has been provided. I will upload a copy [edited] of this response letter tomorrow for those interested.
Breadvan72 said:
This, I am afraid, suggests that your friend is probably not up to the job. A competent litigator would advise you that you do have to disclose key documents in accordance with the Civil Procedure Rules Practice Direction on pre action conduct.
That advice did not come from my friend, that came from insured legal advice via the new company "ABC"...Whilst I have no qualms for sending every last bit of correspondence I have, being honest and open hasn't worked particularly in my favour over the last 7 days, so I'm happy to take their advice on this one.
Well, their advice is contrary to the Practice Direction, and in any event the documents will be subject to disclosure if the ex employer sues. Being open is actually a strong tactic. This is not a game of tit for tat, and taking a petulant stance is rarely a good idea.
Also, at this stage it matters not whether the allegations made against you are true or false. The Court will leave all factual disputes for trial, and will only consider the facts at the interim stage to see if there are issues to be tried. To defeat a claim based on the non compete at the interim stage you need a knock out point. This could be:-
(1) the covenant is manifestly unreasonable.
(2) there is no credible evidence of confidential information in your possession or knowledge.
(3) the employer repudiated the contract.
You appear unlikely, on what you have said thus far, to have a knock out argument on any of these points, although point (2) may be worth some attention. If, however, all that you can do at present is show that there is a dispute about the point, that won't help much at this stage.
Have the solicitors retained counsel yet? If so, do you know their name and chambers? You are in the opening moves of a war now, so you should have a fighty lawyer on board, and that usually means a barrister, as solicitor advocates are still relatively few in number in this field. Counsel should be a tactician as well as an advocate, and what you need now are some tactics.
Also, at this stage it matters not whether the allegations made against you are true or false. The Court will leave all factual disputes for trial, and will only consider the facts at the interim stage to see if there are issues to be tried. To defeat a claim based on the non compete at the interim stage you need a knock out point. This could be:-
(1) the covenant is manifestly unreasonable.
(2) there is no credible evidence of confidential information in your possession or knowledge.
(3) the employer repudiated the contract.
You appear unlikely, on what you have said thus far, to have a knock out argument on any of these points, although point (2) may be worth some attention. If, however, all that you can do at present is show that there is a dispute about the point, that won't help much at this stage.
Have the solicitors retained counsel yet? If so, do you know their name and chambers? You are in the opening moves of a war now, so you should have a fighty lawyer on board, and that usually means a barrister, as solicitor advocates are still relatively few in number in this field. Counsel should be a tactician as well as an advocate, and what you need now are some tactics.
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