Non compete clauses - help!
Discussion
Hi all,
After some thoughts in a situation I may have to face; I know the answer will be to contact an employment solicitor - but I just need opinions on if the situation I'm in is as hopeless as it feels right now....
Scenario:
I've been offered, and have accepted, a role by another company who is a direct competitor to my current employer in the UK and as such may have a non-compete clause in my original contact of employment enforced.
High level details are:
- I'm a permanent member of staff; with 2.5 years service, zero grievances, etc.
- I'm in finance; qualified accountant. I am in a position where I can see contract performance, shape forecasts and plans for the next 5 years.
- I do not generate any intellectual property that could be patented by my current employer nor provide any competitive edge on delivery of contracts.
- I have not been "billed" out on any contracts or have any face to face customer interaction, or any account specific interactions, my duties are at a corporate level.
- I do perform bid modelling, but only shape the finances/mobilisation - I do not negotiate or respond directly.
- I've submitted my notice and now have a "conflict of interest" interview to be scheduled in.
My current T&C's state under.... "Post-Termination Restrictions"
a) would my current employer seek an injunction (and be successful) for me to delay my start date until May 2022? I'm on relatively good terms with my manager, but they do have a vindictive side if you fall out of favour (handing my notice in would certainly trigger this and have seen how people have been treated after doing so)
b) given the unique nature of the sector I work in (there are three main competitors); and that I've been hired for my experience within the sector - is this an unreasonable clause in terms of freedom of me moving roles? As stated, I do not have any intellectual property or intimate knowledge of development/manufacturing that could be classed as sensitive company info.
c) I've made my prospective new employer aware of this clause - for which not seem too bothered of the implications and said they would "deal with it" should it be enforced (they referenced many people moving from my company to them without this being enforced). I raised the question of being sat in limbo for 6 months on the prospect of zero pay; again they were not overly concerned. Should I be concerned?
Am I overthinking this in terms of "worst case"; I do not want to lose this role and new employer is 100% keen on me joining as demonstrated by incentives, package etc. But I have the reality of life (mortgage, kids) and wish to stay within the industry I'm in. My current options are:
a) ignore the clause and fight any injunction (I have legal insurance) that may arise on the grounds of it being overly prohibitive (e.g. 9 months from now)
b) lean on new employer for more clarity/assurances; potentially fighting for support on this
c) forget it and consign myself to being held hostage by my current employer
d) find a role outside of sector and lose the skills/perks/benefits (e.g. salaries are much higher than market average) I've built up over the past years
Sorry for the wall of text but thanks in advance.
TL:DR - I'm worried my current employer will enforce a non complete clause; how screwed am I?
After some thoughts in a situation I may have to face; I know the answer will be to contact an employment solicitor - but I just need opinions on if the situation I'm in is as hopeless as it feels right now....
Scenario:
I've been offered, and have accepted, a role by another company who is a direct competitor to my current employer in the UK and as such may have a non-compete clause in my original contact of employment enforced.
High level details are:
- I'm a permanent member of staff; with 2.5 years service, zero grievances, etc.
- I'm in finance; qualified accountant. I am in a position where I can see contract performance, shape forecasts and plans for the next 5 years.
- I do not generate any intellectual property that could be patented by my current employer nor provide any competitive edge on delivery of contracts.
- I have not been "billed" out on any contracts or have any face to face customer interaction, or any account specific interactions, my duties are at a corporate level.
- I do perform bid modelling, but only shape the finances/mobilisation - I do not negotiate or respond directly.
- I've submitted my notice and now have a "conflict of interest" interview to be scheduled in.
My current T&C's state under.... "Post-Termination Restrictions"
my current contract said:
You shall not directly or indirectly at any time during the period of 6 months after the termination of your employment:
1) Usual boiler plate stuff about soliciting/poaching staff who I manage/work with - fine. They know where I'm going to and are free to browse the internet/job boards as they see fit
2) Will not solicit/work for any of current/prospective customers (it's a shallow pool, but not the case here) - fine; don't steal business/points of contact; I don't engage on sales/CRM. As we're in a narrow field of business; both companies WILL have the same customer(s) but that is not something I have influenced or can influence
3) You shall not directly or indirectly at any time during the period of 6 months engage or be concerned or interested in any business which within the relevant area (a) competes or (b) will compete or (c) is likely to compete with the business
4) - You shall be obliged to draw this document to the attention of any third party for whom or with whom you intend to work at any time during the period of 6 months after the termination of employment.
You acknowledge that:
a) The provisions of this clause shall constitute severable undertakings given for the benefit of the company and may be enforced by the company; and
b) if any restriction or obligation contained in this clause is held to be invalid or enforceable but would be valid or enforcable if part of the prevision were deleted then such restriction or obligation shall apply with such deletions as may be necessary to make it enforceable.
I'm on 3 months notice, which I suspect will turn into gardening leave, which if it were handed in today would give me a start date of December. Given that this clause it to protect intellectual property, my questions are:1) Usual boiler plate stuff about soliciting/poaching staff who I manage/work with - fine. They know where I'm going to and are free to browse the internet/job boards as they see fit
2) Will not solicit/work for any of current/prospective customers (it's a shallow pool, but not the case here) - fine; don't steal business/points of contact; I don't engage on sales/CRM. As we're in a narrow field of business; both companies WILL have the same customer(s) but that is not something I have influenced or can influence
3) You shall not directly or indirectly at any time during the period of 6 months engage or be concerned or interested in any business which within the relevant area (a) competes or (b) will compete or (c) is likely to compete with the business
4) - You shall be obliged to draw this document to the attention of any third party for whom or with whom you intend to work at any time during the period of 6 months after the termination of employment.
You acknowledge that:
a) The provisions of this clause shall constitute severable undertakings given for the benefit of the company and may be enforced by the company; and
b) if any restriction or obligation contained in this clause is held to be invalid or enforceable but would be valid or enforcable if part of the prevision were deleted then such restriction or obligation shall apply with such deletions as may be necessary to make it enforceable.
a) would my current employer seek an injunction (and be successful) for me to delay my start date until May 2022? I'm on relatively good terms with my manager, but they do have a vindictive side if you fall out of favour (handing my notice in would certainly trigger this and have seen how people have been treated after doing so)
b) given the unique nature of the sector I work in (there are three main competitors); and that I've been hired for my experience within the sector - is this an unreasonable clause in terms of freedom of me moving roles? As stated, I do not have any intellectual property or intimate knowledge of development/manufacturing that could be classed as sensitive company info.
c) I've made my prospective new employer aware of this clause - for which not seem too bothered of the implications and said they would "deal with it" should it be enforced (they referenced many people moving from my company to them without this being enforced). I raised the question of being sat in limbo for 6 months on the prospect of zero pay; again they were not overly concerned. Should I be concerned?
Am I overthinking this in terms of "worst case"; I do not want to lose this role and new employer is 100% keen on me joining as demonstrated by incentives, package etc. But I have the reality of life (mortgage, kids) and wish to stay within the industry I'm in. My current options are:
a) ignore the clause and fight any injunction (I have legal insurance) that may arise on the grounds of it being overly prohibitive (e.g. 9 months from now)
b) lean on new employer for more clarity/assurances; potentially fighting for support on this
c) forget it and consign myself to being held hostage by my current employer
d) find a role outside of sector and lose the skills/perks/benefits (e.g. salaries are much higher than market average) I've built up over the past years
Sorry for the wall of text but thanks in advance.
TL:DR - I'm worried my current employer will enforce a non complete clause; how screwed am I?
speedyman said:
Your over thinking it. They cannot stop you moving to a new employer and it would be down to your old company to prove any losses due to your actions in the next six months. Forget about it and enjoy your new job.
I agree with this. Just don’t contact clients of the original company and offer the services of the new company, at least for 6 months.I'm not so sure it's so easy to dismiss as some others think.
That point 3 seems clear and you're going to breach it. These clauses are not illegal but they need to be reasonable. This one may be that.
Here's a couple of links for some reading (you may have seen these...)
https://www.legalnature.co.uk/guides/is-my-non-com...
https://www.ms-solicitors.co.uk/employee/faqs-empl...
https://businessadvice.co.uk/insurance/liability-a...
That point 3 seems clear and you're going to breach it. These clauses are not illegal but they need to be reasonable. This one may be that.
Here's a couple of links for some reading (you may have seen these...)
https://www.legalnature.co.uk/guides/is-my-non-com...
https://www.ms-solicitors.co.uk/employee/faqs-empl...
https://businessadvice.co.uk/insurance/liability-a...
Edited by Canon_Fodder on Tuesday 31st August 15:29
More views from m'learned friends...
The Supreme Court no less!
https://www.pinsentmasons.com/out-law/news/uk-supr...
The Supreme Court no less!
https://www.pinsentmasons.com/out-law/news/uk-supr...
mgv8 said:
Your right to work is stronger than the no-compete. As you say its really about you taking things with you like customers. As you say, get advice but in most cases these just don't hold water.
That really is a very broad and incorrect statement to make, there are many scenarios where a restrictive covenant may apply quite fairly and be enforceable and others where it clearly would not. whether or not the restriction is fair and reasonable for the OP's skill set and the type of job will be the biggest factorsProbably better if the mods move this to the employment thread where it's more likely to be seen by a few who know a thing or two about the subject, Jason and Jules should be able to give some meaningful advice on there
Agree with others that clauses that are 'unreasonable' or affect your ability to work are unenforceable. I'm an IFA and had similar clauses in my contract when I left to set up my own practice. My clause was a 'non deal' one for 12 months rather than the more usual 'non solicit' so even if old clients contacted me I could not engage with them for 12 months. What they couldn't do though was stop me setting up my IFA practice which did 'compete' in so much as offering the same type of services in the same area, albeit a one man band rather than as a national firm. I got my contract checked out by a Solicitor so much as you are asking for general thoughts here I'd still show the contract to an employment lawyer who should be able to put you straight. You have a right to work, just not a right to take clients with you initially, so you should be fine. Good luck.
They cannot stop you working for a competitor, unless they pay you not to!
Don’t worry about it. Offer to work your notice and to do so with integrity, tell them where your going and tell them you will work there with integrity also.
If they want to be a
holes, let them, you’ll win.
Unless they are willing to pay you 6 months and send you home, no phone, laptop etc, they cannot enforce that clause. You have a right to work.
Don’t worry about it. Offer to work your notice and to do so with integrity, tell them where your going and tell them you will work there with integrity also.
If they want to be a
holes, let them, you’ll win. Unless they are willing to pay you 6 months and send you home, no phone, laptop etc, they cannot enforce that clause. You have a right to work.
NickCQ said:
poo at Paul's said:
They cannot stop you working for a competitor, unless they pay you not to!
Unless they are willing to pay you 6 months and send you home, no phone, laptop etc, they cannot enforce that clause. You have a right to work.
It really isn't as simple as that.Unless they are willing to pay you 6 months and send you home, no phone, laptop etc, they cannot enforce that clause. You have a right to work.
It is wholly unreasonable to expect you to not work in the same industry of for a competitor for a certain period. What they can do, ans what most that want to achieve this do do, is to pay you for that period, eg if they want you out the industry for 6 months, have you on 6 months notice and send you home, then they can control, what you can and can’t do.
But with 3 m notice, which they will pay for, and then an additional 6 where they don’t, that’s unreasonable.
BUT, even if it was deemed reasonable by some quirk or nuance, they would also have to prove some form of loss occurred to them. Again, they cannot just make it impossible for you to work for someone else for 6m no pay etc.
And they know it.
So just play it cautiously and play it totally fair, don’t nick clients, don’t nick IP, distance yourself from it all and make a point of doing so, and you will be fine.
I have some experience in these matters as a former managing director dealing with HR matters and employment contracts, although not an employment lawyer myself. Whilst there are some specific exceptions, the following points need to be made:
1. A restrictive covenant that prevents you from working is unreasonable and unenforceable. Now, this should be qualified by saying that you need to respect the non compete element at least, if that exists in the wording - which it does. So no solicitation of employees or customers of your current company for the period defined in the contract by you directly. Bear in mind, that as both companies already operate in the same sector, there will be migration of customers in both directions as a matter of course, most likely, whether you are there or not. Both companies probably already have very similar prospect lists as well.
2. Point 1 becomes even less enforceable if you operate in a niche sector where your skills are very specific to your industry, although again, respecting the non compete element of the contract from and integrity point of view.
3. To attempt any enforcement of the restrictive covenants, your current company would have to prove actual losses and prove that those were directly down to your actions in your new company. The latter being almost impossible to prove.
4. Your letter of resignation, should also refer to the restrictive clauses and in particular the non compete terms of your contract and you should include an undertaking within your resignation letter that you understand them and that you do not intend to make any solicitations to either customers or staff according to those terms.
5. Related to point 1, they cannot stop you earning a living. So, the only way they can actually force you to adhere to the covenants more generally (notwithstanding the non compete aspects) is if they pay you for the duration of the time limits specified in the contract.
Perhaps also, your new Company’s HR/Legal function could review your contract and provide assistance in drafting an appropriate letter of resignation for you and undertake (in writing to you) to underwrite any claim made against you as an individual.
I would be confident that absolutely nothing will come of this and you will be just fine in your new job.
1. A restrictive covenant that prevents you from working is unreasonable and unenforceable. Now, this should be qualified by saying that you need to respect the non compete element at least, if that exists in the wording - which it does. So no solicitation of employees or customers of your current company for the period defined in the contract by you directly. Bear in mind, that as both companies already operate in the same sector, there will be migration of customers in both directions as a matter of course, most likely, whether you are there or not. Both companies probably already have very similar prospect lists as well.
2. Point 1 becomes even less enforceable if you operate in a niche sector where your skills are very specific to your industry, although again, respecting the non compete element of the contract from and integrity point of view.
3. To attempt any enforcement of the restrictive covenants, your current company would have to prove actual losses and prove that those were directly down to your actions in your new company. The latter being almost impossible to prove.
4. Your letter of resignation, should also refer to the restrictive clauses and in particular the non compete terms of your contract and you should include an undertaking within your resignation letter that you understand them and that you do not intend to make any solicitations to either customers or staff according to those terms.
5. Related to point 1, they cannot stop you earning a living. So, the only way they can actually force you to adhere to the covenants more generally (notwithstanding the non compete aspects) is if they pay you for the duration of the time limits specified in the contract.
Perhaps also, your new Company’s HR/Legal function could review your contract and provide assistance in drafting an appropriate letter of resignation for you and undertake (in writing to you) to underwrite any claim made against you as an individual.
I would be confident that absolutely nothing will come of this and you will be just fine in your new job.
poo at Paul's said:
It is wholly unreasonable to expect you to not work in the same industry of for a competitor for a certain period.
Yet there are scores of cases where courts have upheld exactly that.I would not want to breach one of these clause without my former employer's express consent to what I was planning to do (usually they will give it).
NickCQ said:
poo at Paul's said:
It is wholly unreasonable to expect you to not work in the same industry of for a competitor for a certain period.
Yet there are scores of cases where courts have upheld exactly that.I would not want to breach one of these clause without my former employer's express consent to what I was planning to do (usually they will give it).
sjt85 said:
- I have not been "billed" out on any contracts or have any face to face customer interaction, or any account specific interactions, my duties are at a corporate level.
Unless you nick the roller deck from the current employer with all the customer info don't worry about it.NickCQ said:
Superleg48 said:
Cite a few examples where someone engaged in a back office role, like the finance department, had such a clause upheld. I’ll wait…
Agree, seniority is important - apologies if I missed it but do we know OP is back office?Gassing Station | Speed, Plod & the Law | Top of Page | What's New | My Stuff