Restrictive covenant
Discussion
Hi, I'm looking for some advice.
An ex employee of mine signed, as a part of their contract, a restrictive covenant that prohibits them from contacting my existing customer base and trying to engage with them within their new role at a rival company.
I have, within 2 months of them leaving, seen a number of cases where they have directly approached my clients, touting for business and even sending them proposals for work to be carried out.
I want to send a warning shot before taking this further, would a simple letter wishing them well in their new role but reminding them of the clause in their contract be the way to go about it? IE, not mentioning any specifics, just drawing their attention to said covenant and advising that we would take things further if we were to see any of this?
I hope that all makes sense, thanks in advance for any advice.
An ex employee of mine signed, as a part of their contract, a restrictive covenant that prohibits them from contacting my existing customer base and trying to engage with them within their new role at a rival company.
I have, within 2 months of them leaving, seen a number of cases where they have directly approached my clients, touting for business and even sending them proposals for work to be carried out.
I want to send a warning shot before taking this further, would a simple letter wishing them well in their new role but reminding them of the clause in their contract be the way to go about it? IE, not mentioning any specifics, just drawing their attention to said covenant and advising that we would take things further if we were to see any of this?
I hope that all makes sense, thanks in advance for any advice.
This is not an unusual covenant, especially in sales and recruitment roles. Heck, I have even written in into contracts myself when I had my own business.
However, there is tonnes of speculation, conjecture and third-hand opinions around about whether an employee has actually been dragged to court over this, and had a successful judgement made to their detriment.
As an employer, having looked into it, it does seem that you would require some pretty water-tight evidence of breach of covenant following the termination of an employment contract - and then further to that, some pretty deep pockets and more than a little luck to actually secure a judgement in court your way.
The only time I have ever heard of anything remotely like this was when I started at a recruitment company ages ago, and the Director told me that they had successfully had a judgement go their way in such a situation - so DON'T ever think of doing it! However, none of the employees had heard of this happening, so it may be blag.
From my experience (and this is just my experience) it seems best to just let it go, and spend the time and money concentrating on building and promoting your own business - rather than wasting huge amounts of time and money chasing an ex-employee....not to mention all the stress and negative energy that goes with that too.
Just my opinion though. But remember how short life is!
Peace and Love.
However, there is tonnes of speculation, conjecture and third-hand opinions around about whether an employee has actually been dragged to court over this, and had a successful judgement made to their detriment.
As an employer, having looked into it, it does seem that you would require some pretty water-tight evidence of breach of covenant following the termination of an employment contract - and then further to that, some pretty deep pockets and more than a little luck to actually secure a judgement in court your way.
The only time I have ever heard of anything remotely like this was when I started at a recruitment company ages ago, and the Director told me that they had successfully had a judgement go their way in such a situation - so DON'T ever think of doing it! However, none of the employees had heard of this happening, so it may be blag.
From my experience (and this is just my experience) it seems best to just let it go, and spend the time and money concentrating on building and promoting your own business - rather than wasting huge amounts of time and money chasing an ex-employee....not to mention all the stress and negative energy that goes with that too.
Just my opinion though. But remember how short life is!
Peace and Love.
That's fair - thanks for the input. Have similar thoughts myself.
Would a simple letter wishing said employee luck in their new venture, and reminding them of the contract they signed freely whilst working for me constitute an issue legally just as an attept to appeal to their better moral nature?
Would a simple letter wishing said employee luck in their new venture, and reminding them of the contract they signed freely whilst working for me constitute an issue legally just as an attept to appeal to their better moral nature?
guillemot said:
That's fair - thanks for the input. Have similar thoughts myself.
Would a simple letter wishing said employee luck in their new venture, and reminding them of the contract they signed freely whilst working for me constitute an issue legally just as an attept to appeal to their better moral nature?
Legally - what exactly is in their employment contract? You obviously can't introduce any new or modified terms into such a letter. But from a legal standpoint, I can see no problem in re-stating, word-for-word, the terms of their original contract, no.Would a simple letter wishing said employee luck in their new venture, and reminding them of the contract they signed freely whilst working for me constitute an issue legally just as an attept to appeal to their better moral nature?
However. People are people. Never underestimate the opportunity to annoy, upset or generally piss someone off. Especially if they are leaving, and especially if you think they may have the capability of harming your own business further.
For example, if you put that in their farewell letter, it may annoy and antagonise so that they think 'well FU then, I WILL be as annoying and dodgy as I can?' But that's a decision for you, I don't know the employee in question. However if you don't go there and just give them a standard 'seeya' letter, shake their hand and wish them well, it may be that they will leave thinking you're an all-round good egg, and try to keep out of your way? But as I said, I don't know them.
Me, I found out one day that 3 of my employees were setting up a rival business in the next road down in our city. They had premises sorted out, they were advertising for staff, and they were clearly gonna try and poach some of my customers.
When I found out, I counted to ten, slept on it, thought about it, and got myself in a position mentally that overcame my initial rage and indignance!
I approached it in a calm, business-like way. They ALL had similar covenants in their contracts, which clearly they were going to be happy about breaching. My business was not massive, and I would not have thought about wasting time and thousands of pounds in chasing them through court.
So, all I did was be completely pleasant, wish them well in their new venture, and shake their hands when they left. No hard feelings, we are all still friends.
They didn't, as far as I could tell, steal any (or many) customers at first. Once I had recruited new employees, my business pretty much carried on as normal.
After two months, their new venture failed
Karma? I dunno. But I was the one left on the moral high-ground!
Ray Luxury-Yacht said:
... However, there is tonnes of speculation, conjecture and third-hand opinions around about whether an employee has actually been dragged to court over this, and had a successful judgement made to their detriment.
...
Only in places like this. In the real world, there is no such speculation, but lots of judgments. ...
Lost soul said:
It is not enforceable , you can not denie a person the right to earn a living
OP, ignore this fine example of pub law! A reasonable restriction on soliciting and dealing with customers is enforceable. What is reasonable depends on business context, scope and duration of restriction. Such a clause does not prevent the employee from earning a living. If Lost Soul says otherwise, no doubt he can cite case law in his support and tell us how many real life restrictive covenant cases he has argued. My current guess is somewhere between none and zero. I have lost count of mine - maybe fifty or so. Breadvan72 said:
Lost soul said:
It is not enforceable , you can not denie a person the right to earn a living
OP, ignore this fine example of pub law! A reasonable restriction on soliciting and dealing with customers is enforceable. What is reasonable depends on business context, scope and duration of restriction. Such a clause does not prevent the employee from earning a living. If Lost Soul says otherwise, no doubt he can cite case law in his support and tell us how many real life restrictive covenant cases he has argued. My current guess is somewhere between none and zero. I have lost count of mine - maybe fifty or so. 
Still buls
tting, eh? Care to share with us you legal credentials and experience in this field? Courts enforce sensible restrictive covenants on pretty much a daily basis. I am currently updating my section of a multi author textbook on this subject, and citing dozens of cases in which covenants were enforced, but do please share your evidently considerable expertise.
tting, eh? Care to share with us you legal credentials and experience in this field? Courts enforce sensible restrictive covenants on pretty much a daily basis. I am currently updating my section of a multi author textbook on this subject, and citing dozens of cases in which covenants were enforced, but do please share your evidently considerable expertise.Breadvan72 said:
Still bulstting, eh? Care to share with us you legal credentials and experience in this field? Courts enforce sensible restrictive covenants on pretty much a daily basis. I am currently updating my section of a multi author textbook on this subject, and citing dozens of cases in which covenants were enforced, but do please share your evidently considerable expertise.
tting, eh? Care to share with us you legal credentials and experience in this field? Courts enforce sensible restrictive covenants on pretty much a daily basis. I am currently updating my section of a multi author textbook on this subject, and citing dozens of cases in which covenants were enforced, but do please share your evidently considerable expertise.
But you're forgetting the obiter remarks of LostSoul J in the case of Weatherspoons and Eight Pints [2014] All England Law Reports 10345
Breadvan72 said:
OP, ignore this fine example of pub law! A reasonable restriction on soliciting and dealing with customers is enforceable. What is reasonable depends on business context, scope and duration of restriction. Such a clause does not prevent the employee from earning a living. If Lost Soul says otherwise, no doubt he can cite case law in his support and tell us how many real life restrictive covenant cases he has argued. My current guess is somewhere between none and zero. I have lost count of mine - maybe fifty or so.
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
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