Restrictive covenant

[anonymous-user]

mike9009 said:

Just out of interest, would two years be considered 'reasonable' to not work for a customer or competitor within a specialist engineering role? I may have received some 'dodgy' advice previously.....

Thanks, Mike

I'll have a stab - not a lawyer though, so looking forward to the flaming. I am simply a client who pays for the advice and this is my current idiot level understanding.

it would be an unusual set of circumstances where you could stop a person working for someone else - unless you could demonstrate that they had specialist knowledge "owned" by your business that is so vital that it would harm your business if a competitor knew it.

It is relatively easy to enforce a well worded covenant that stops people poaching or trading with clients or prospects less easy to stop him working completely.

[anonymous-user]

In Scully v Lee, a two year restriction in the context of international sales of commercial fuel tank gauges was regarded as too long. In an upstream oil industry case, a two year restraint was upheld. Two years would be regarded by most lawyers in this field as on the long side, and it's usually safer for the employer to stop at a one year restriction.

Non competition clauses are upheld more often than they used to be, but precise non solicitation and non dealing clauses are still a safer bet.

[anonymous-user]

Breadvan72 said:

In Scully v Lee, a two year restriction in the context of international sales of commercial fuel tank gauges was regarded as too long. In an upstream oil industry case, a two year restraint was upheld. Two years would be regarded by most lawyers in this field as on the long side, and it;s usually safer for the employer to stop at a one year restriction.

So epic fail by me.

they seem fairly unusual/specialist industries I would say - would this work in a more mundane industry - e.g. a UK law firm or accountancy practice?

[anonymous-user]

Two years would be too long in that context.

[anonymous-user]

Breadvan72 said:

Two years would be too long in that context.

I'll stop posting after this I promise

1) So in theory I could "prevent" an employee for working within the profession for a period of X months?
2) can i ask what chambers you are at?

thanks,
sw

[anonymous-user]

(1) No, you could never exclude someone from their profession altogether. In certain contexts you could limit someone's ability to compete in a defined field for a defined period. If the effect of a covenant is truly to prevent someone from working, it is unenforceable. A reasonable covenant does not have this effect.

(2) Blackstone Chambers.

[anonymous-user]

Breadvan72 said:

(1) No, you could never exclude someone from their profession altogether. In certain contexts you could limit someone's ability to compete in a defined field for a defined period. If the effect of a covenant is truly to prevent someone from working, it is unenforceable. A reasonable covenant does not have this effect.

(2) Blackstone Chambers.

One final post

I read the supplementary question as "to not work" within the field - is that classed as competing if the employee doesn't solicit/trade with clients?

thanks

eta
(2) I bet your Christmas Parties are amazing.

Edited by anonymous-user on Thursday 2nd October 21:30

[mike9009]

Breadvan72 said:

In Scully v Lee, a two year restriction in the context of international sales of commercial fuel tank gauges was regarded as too long. In an upstream oil industry case, a two year restraint was upheld. Two years would be regarded by most lawyers in this field as on the long side, and it's usually safer for the employer to stop at a one year restriction.

Non competition clauses are upheld more often than they used to be, but precise non solicitation and non dealing clauses are still a safer bet.

Thanks for the info. I suspect the advice I received probably won't have helped me. I have worked in this specialist industry for most of my career - and hence most of my technical knowledge relates to this (having developed, worked with and approved the processes). I was informed the length of time (2 years) was 'unreasonable' and therefore could not be enforced. I was also pressured into signing the covenant a few years ago......

I obviously have transferable skills to other industries but it would be easier to find work within the industry (no direct UK competitors, but UK customers). The covenant is very one sided - if I actively sought employment elsewhere I could understand, but if I am made redundant, dismissed or whatever - my opportunities for employment would be restricted for two years.

[anonymous-user]

No one can advise you without seeing the precise clause and knowing the business context. A two year restriction is quite unusual, and hard to justify in most cases.

[mike9009]

Breadvan72 said:

No one can advise you without seeing the precise clause and knowing the business context. A two year restriction is quite unusual, and hard to justify in most cases.

Thanks - I won't bother you any further (probably too much to go into on a PH thread)- and you seem to get involved with lots of stuff on PH anyway. The covenant will only be a worry if I leave obviously. Thanks for your advice - it provides some comfort (maybe I could be a test case??)

Mike