unfair restrictive convenant
Discussion
Hi Guys,
I'm used to restrictive covenants in the financial services industry, but I have a friend who works at a hairdressers, and whilst there is nothing in her contract, there is a note in the employee handbook.
This note states that they she can't work for another hairdresser within half a mile of her employers shop, for 6 months after stopping work for him.
She isn't interested in nicking clients, but the salon facing has offered her a job.
Is this clause enforcible?
I'm used to restrictive covenants in the financial services industry, but I have a friend who works at a hairdressers, and whilst there is nothing in her contract, there is a note in the employee handbook.
This note states that they she can't work for another hairdresser within half a mile of her employers shop, for 6 months after stopping work for him.
She isn't interested in nicking clients, but the salon facing has offered her a job.
Is this clause enforcible?
This is where it gets more complicated.
She has worked for him for in 2006 for abc ltd, and they signed contracts working for abc ltd. A couple of years later this new employee handbook appeared.
Then in november last year abc went bust, and started trading as xyz ltd but:
1. the staff hasn't been told this, they were told it was rebranding.
2. yesterday they were given contracts for xyz ltd, but with extra clauses inserted (staff have to start earlier, but unpaid)
3. 2 years ago they were told they werent working wednesdays, but it has only just appeared in the new contracts (nothing in writing before just verbal).
She has worked for him for in 2006 for abc ltd, and they signed contracts working for abc ltd. A couple of years later this new employee handbook appeared.
Then in november last year abc went bust, and started trading as xyz ltd but:
1. the staff hasn't been told this, they were told it was rebranding.
2. yesterday they were given contracts for xyz ltd, but with extra clauses inserted (staff have to start earlier, but unpaid)
3. 2 years ago they were told they werent working wednesdays, but it has only just appeared in the new contracts (nothing in writing before just verbal).
Unenforceable unless she is being paid for those 6 months - otherwise known as Garden Leave.
No doubt an expert will be along shortly, but my company had many thousands of employees, many of whom were on non compete restrictions, ALL of them had to be paid during the non compete period.
Otherwise it's a restraint of trade.
HTH
No doubt an expert will be along shortly, but my company had many thousands of employees, many of whom were on non compete restrictions, ALL of them had to be paid during the non compete period.
Otherwise it's a restraint of trade.
HTH
A clause like this can be very enforceable, it needs to be protecting a genuine business interest, but six months and half a mile is not likely to be viewed as unreasonable.
The issue is whether she is contractually bound by it given the slightly complex history, that's hard to say from the detail posted, but there certainly is a chance that the employer could enforce it ( and that's without being paid for the six months)
The issue is whether she is contractually bound by it given the slightly complex history, that's hard to say from the detail posted, but there certainly is a chance that the employer could enforce it ( and that's without being paid for the six months)
NDA said:
Unenforceable unless she is being paid for those 6 months - otherwise known as Garden Leave.
No doubt an expert will be along shortly, but my company had many thousands of employees, many of whom were on non compete restrictions, ALL of them had to be paid during the non compete period.
Otherwise it's a restraint of trade.
HTH
Not a RoT if it is reaonable, ie geographically and time period.No doubt an expert will be along shortly, but my company had many thousands of employees, many of whom were on non compete restrictions, ALL of them had to be paid during the non compete period.
Otherwise it's a restraint of trade.
HTH
No contractual necessity to pay. Garden leave is making an employee work the notice period, but not in the office. That may be why your colleagues were paid on garden leave.
My contract has a similar clause about going to work for competition. Not long after I joined one of my colleagues went to work for our direct competitor (he had the same clause). The company did nothing about it. I asked the legal guy about it and he told me that such clauses can only be enforced if specific businesses are named on the contract as otherwise its a restriction of trade. If a multi million pound business is unwilling to test it in court I would suggest a local hair salon wouldn't either.
robemcdonald said:
I asked the legal guy about it and he told me that such clauses can only be enforced if specific businesses are named on the contract as otherwise its a restriction of trade.
No, there is a lot of myth and noise around this subject as this thread has shown, not least because relatively recent case law has changed the understanding of how this can be applied.To work a restrictive covenant needs to be protecting a specific business interest and be reasonable in time and scope. In this case a hairdresser moving across the street is highly likely to result in customers moving with her and so a six month restriction within half a mile is IMHO almost certainly going to be seen as reasonable by a court.
The issues are not whether it can be enforced, it can, the issues are whether the employer would enforce it and whether it is part of her employment contract.
On the first, nobody can say, it's expensive to go to law and they might not do it.
On the second there is no requirement for an employment contract to be written and signed, a contract exists nevertheless. Having a written contract makes disputes much easier to resolve. In this case is the clause a part of the terms of employment? The employer would argue that it was and that the employee was aware of that, as she clearly is.
So really it comes down to whether you think that the employer would try and enforce it, if they do there is no certainty that they would succeed but you certainly can't rule it out.
WhereamI said:
No, there is a lot of myth and noise around this subject as this thread has shown, not least because relatively recent case law has changed the understanding of how this can be applied.
To work a restrictive covenant needs to be protecting a specific business interest and be reasonable in time and scope. In this case a hairdresser moving across the street is highly likely to result in customers moving with her and so a six month restriction within half a mile is IMHO almost certainly going to be seen as reasonable by a court.
The issues are not whether it can be enforced, it can, the issues are whether the employer would enforce it and whether it is part of her employment contract.
On the first, nobody can say, it's expensive to go to law and they might not do it.
On the second there is no requirement for an employment contract to be written and signed, a contract exists nevertheless. Having a written contract makes disputes much easier to resolve. In this case is the clause a part of the terms of employment? The employer would argue that it was and that the employee was aware of that, as she clearly is.
So really it comes down to whether you think that the employer would try and enforce it, if they do there is no certainty that they would succeed but you certainly can't rule it out.
And what is the specific business interest? Specific hair salon customers? Even if so said employee is unlikely to have a black book of all contacts, contact them and offer them an introductory discount. Like swerni above if a customer chooses to follow a person you can't always stop that. To work a restrictive covenant needs to be protecting a specific business interest and be reasonable in time and scope. In this case a hairdresser moving across the street is highly likely to result in customers moving with her and so a six month restriction within half a mile is IMHO almost certainly going to be seen as reasonable by a court.
The issues are not whether it can be enforced, it can, the issues are whether the employer would enforce it and whether it is part of her employment contract.
On the first, nobody can say, it's expensive to go to law and they might not do it.
On the second there is no requirement for an employment contract to be written and signed, a contract exists nevertheless. Having a written contract makes disputes much easier to resolve. In this case is the clause a part of the terms of employment? The employer would argue that it was and that the employee was aware of that, as she clearly is.
So really it comes down to whether you think that the employer would try and enforce it, if they do there is no certainty that they would succeed but you certainly can't rule it out.
The proper time to agree terms for a contract is before the employment commences. This appears not to have happened in the case under discussion. It might be a reasonable contract, and if she had agreed to its terms before starting to work at that salon, then it would seem to be enforceable.
edc said:
And what is the specific business interest? Specific hair salon customers? Even if so said employee is unlikely to have a black book of all contacts, contact them and offer them an introductory discount. Like swerni above if a customer chooses to follow a person you can't always stop that.
I don't think it takes an in depth knowledge of hair dressing to guess that she is most likely to be one of a small number of stylists and that she will have customers who go specifically to her. It is not a big leap to suppose that since she will be working across the road a number of those customers may become aware of where she has gone and follow her there. It doesn't require her to go round contacting customers when all she has done is move over the road.The main point here is that nobody can say that if she moves to this new job there won't be repercussions, the ex-employer might take it to court and might be able to make a case good enough to win.
Beyond that it's about probabilities, I don't think it's likely that they would take it to court and win, but you can't discount the possibility.
WhereamI said:
The main point here is that nobody can say that if she moves to this new job there won't be repercussions, the ex-employer might take it to court and might be able to make a case good enough to win.
Bearing in mind that a) it's not in her contract, and b) it's in an employee handbook that she was not provided with before, or when she started, her employment, what would be the basis for taking her to court?singlecoil said:
Bearing in mind that a) it's not in her contract, and b) it's in an employee handbook that she was not provided with before, or when she started, her employment, what would be the basis for taking her to court?
It's back to probabilities, we can't say that the employer definitely won't try and enforce it, we can't say that it is definitely unenforceable and we can't say that if it went to court the employer wouldn't win. It probably wouldn't come to that but it might.The employer might, for example, produce a copy of the handbook dated prior to her employment with this clause and claim that she was supplied with this on starting, we only have the OP's word to say that she wasn't. But certainly if it came to it claiming not to be bound by the clause is probably a better route than claiming that it isn't enforceable.
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