Restrictive Convenant Wording
Discussion
I know these threads pop up a bit and I'm not after advice as to whether they are enforceable (BV will kill you all if you say they aren't) but wanted to check what people thought of the wording.
The image below shows my contract. In clause 18.2.4. The words "engaged, concerned or interested in", does that included employed by? The rest of the clause talks about owning shares and voting rights so I am confused.
I am not at the stage of an offer from a competitor but a job has come up and before I go down the route of applying wanted to check I wasn't going to be in the s
t.
The image below shows my contract. In clause 18.2.4. The words "engaged, concerned or interested in", does that included employed by? The rest of the clause talks about owning shares and voting rights so I am confused.
I am not at the stage of an offer from a competitor but a job has come up and before I go down the route of applying wanted to check I wasn't going to be in the s
t.The wording applies to employment. Engaged covers engagement as employee or as contractor. The reference to shareholding is a proviso that stops the clause from applying to a non material shareholding in a company. You could not own a competing business but you could in the circumstances described have a small stake in one.
I assume from the wording of the extract quoted that this is part of a post termination restriction rather than an exclusivity/fidelity clause applicable whilst employment continues.
I assume from the wording of the extract quoted that this is part of a post termination restriction rather than an exclusivity/fidelity clause applicable whilst employment continues.
Unless the categories of suppliers, prospects and clients are narrowed down in a definition clause, the last bit of the extract does appear wide. An employer can in principle protect relationships with suppliers and prospects as well as with clients, but it is usual to limit those covered by the covenant to those dealt with by the employee, and it is preferable to define prospects by reference to there being, for example, some negotiations between them and the employer (so not just everyone on LinkedIn).
Scabutz said:
The image below shows my contract. In clause 18.2.4. The words "engaged, concerned or interested in", does that included employed by? The rest of the clause talks about owning shares and voting rights so I am confused.
During the Restricted Period you can't work for a competitor who provided "restricted services" - what does that clause say? ETA - and what is the restricted period? Six months? Then what is your notice period?
Jasandjules said:
During the Restricted Period you can't work for a competitor who provided "restricted services" - what does that clause say?
ETA - and what is the restricted period? Six months? Then what is your notice period?
Restricted services definition lists the types of services that my current company offers and that's the same as the new job.ETA - and what is the restricted period? Six months? Then what is your notice period?
The restricted period is 12 months and the the notice period is 3.
One thing I've just realised is this is my original contract. We were bought out and I am sure the new company gave us new contracts. Just trying to find my new one.
Scabutz said:
Restricted services definition lists the types of services that my current company offers and that's the same as the new job.
My view as an employer, was that 12 month restrictive covenants are quite tricky to enforce unless you're being paid out (Garden Leave) etc. Restriction of trade seems to ring a vague bell. I assume you're not on lengthy Garden Leave or haven't just finished an earn-out / exit? Have your prospective new employers been made aware of your contract terms?
As above, it sounds like you need advice to hopefully avoid any legal action. Also listen to BV - he is an expert, I am not.
NDA said:
My view as an employer, was that 12 month restrictive covenants are quite tricky to enforce unless you're being paid out (Garden Leave) etc. Restriction of trade seems to ring a vague bell.
I assume you're not on lengthy Garden Leave or haven't just finished an earn-out / exit? Have your prospective new employers been made aware of your contract terms?
As above, it sounds like you need advice to hopefully avoid any legal action. Also listen to BV - he is an expert, I am not.
Its all very early stages at the min. I haven't resigned or even been offered a new job yet. I just wanted to check this stuff out before I get too excited about it if its going to a problem.I assume you're not on lengthy Garden Leave or haven't just finished an earn-out / exit? Have your prospective new employers been made aware of your contract terms?
As above, it sounds like you need advice to hopefully avoid any legal action. Also listen to BV - he is an expert, I am not.
If it progress to that stage I will seek professional advice and try and negotiate.
Does 18.2.4 seem a bit wide? Unless I'm reading it wrongly, it would seem to preclude employment in any role by a competitor. You might be super Steve salesman in your current role, however you become sad skint Steve when fired for not being super enough. Competing Widget Co takes pity and offers you job of sanitary Steve bog cleaner. Stiff!
18.2.4 might be saved by the provision for consent, not to be withheld unreasonably, in 18.2, as no reasonable employer could object to an ex-employee doing something very different from what the ex-employee did for the employer, but the drafting is not ideal. NB: without seeing the whole contract, and knowing the business context, it is hard to opine with confidence on the reasonableness of the covenant.
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