How enforceable are anti-compete clauses?
Discussion
A friend, who is established and well known in his field is looking to leave his current company because of the MD and general caustic working practises & environment created.
He has somewhere to go, has a 6month notice period, but also non-complete clause in his directors contract which he felt slightly under duress to sign upto when he became a director there. I dont think his original role was director or had this clause.
He needs to get out, it is starting to effect his health but the only way out he can see is to be fired, which releases him of all obligations.
The employment lawyer he has spoken to says non-compete are not enforceable.
His MD, who has a bigger, more expensive lawyer, says they are (according to the MD at least)
I (and he) thought that if non-compete clauses prevented you from doing what you do best then then under (then) EU rules, they are not enforceable, but we are not legal, we are sales men!
If there is PH collective experience / knowledge / wisdom out there, ideally with cases to back it up then I know he would grateful to hear of it.
V..
He has somewhere to go, has a 6month notice period, but also non-complete clause in his directors contract which he felt slightly under duress to sign upto when he became a director there. I dont think his original role was director or had this clause.
He needs to get out, it is starting to effect his health but the only way out he can see is to be fired, which releases him of all obligations.
The employment lawyer he has spoken to says non-compete are not enforceable.
His MD, who has a bigger, more expensive lawyer, says they are (according to the MD at least)
I (and he) thought that if non-compete clauses prevented you from doing what you do best then then under (then) EU rules, they are not enforceable, but we are not legal, we are sales men!
If there is PH collective experience / knowledge / wisdom out there, ideally with cases to back it up then I know he would grateful to hear of it.
V..
When Breadvan72 posted here, he said many times that contrary to the opinion of the bloke in the pub, non-compete clauses can be enforced, depending on the circumstances, so basically "how long is a piece of string?"
But its the lawyers who make big bucks measuring string!
A senior sales person could legitimately have restrictions enforced, depending on the terms:time,range, industry, & a thousand other things.
But its the lawyers who make big bucks measuring string!
A senior sales person could legitimately have restrictions enforced, depending on the terms:time,range, industry, & a thousand other things.
Thanks everyone, it really is a friend and not a badly veiled ph post.
The MD is a bully and a micromanaging control freak. To give you an idea he currently has eveyone travelling into the kent office daily (a 2 - 3 hour M25 journey each way) because he doesn't believe working from home or even currently from the London sales office is in the best interest of him (his business)
Signing the Directors contract was (i believe) a sign now or it's gone type situation and i believe there was also a change in contract that changed his directors share status in a similar situation.
I'll see if i can get more info. Or even get him to post.
The MD is a bully and a micromanaging control freak. To give you an idea he currently has eveyone travelling into the kent office daily (a 2 - 3 hour M25 journey each way) because he doesn't believe working from home or even currently from the London sales office is in the best interest of him (his business)
Signing the Directors contract was (i believe) a sign now or it's gone type situation and i believe there was also a change in contract that changed his directors share status in a similar situation.
I'll see if i can get more info. Or even get him to post.
Mr Spoon said:
The only course if action if any is to get the new employer to back you and cover the future legal battle.
My next door neighbour was technical manager (not a director) of a firm and was head-hunted to a bigger place.He had a 12 mth 'can't do same job in same industry' type of clause. Initially it was thought his old firm couldn't stop him earning a living and being a technical manager in that industry was all he knew.
However his old firm sought to enforce the clause and his new one spent a lot of money on legal advice which was full of ifs, buts and maybes. In the end it was decided it probably could be enforced, but his old firm would have to pay him. They offered to pay him 80% of his salary for 12 mths gardening leave.
Totally depends what the "non-complete clause" says. I'd expect that the circumstances under which your friend signed the contract (e.g. "he felt slightly under duress to sign") are largely irrelevant.
He should get advice from a lawyer who specialises in such things.
Pinsent Masons said:
A non-compete clause, also known as a 'non-compete restrictive covenant', is a clause in a contract of employment which prohibits an employee from competing with an ex-employer for a certain period after the employee has left the business. Other common restrictive covenants aim to prevent the ex-employee from soliciting or dealing with certain customers or key employees of the business after they leave.
Legally, the starting point for post-termination restrictions on employees is that they are void as a restraint on trade and contrary to public policy. Therefore, if the clause is challenged, the ex-employer must be able to show the court that the clause is designed to protect its legitimate business interests; and that it extends no further than is reasonably necessary to protect those interests.
From https://www.pinsentmasons.com/out-law/news/uk-supr...
Whether the clause is enforceable or not will depend on exactly what it says, including how long any restriction lasts, and whether the existing employer will pay him for the duration.Legally, the starting point for post-termination restrictions on employees is that they are void as a restraint on trade and contrary to public policy. Therefore, if the clause is challenged, the ex-employer must be able to show the court that the clause is designed to protect its legitimate business interests; and that it extends no further than is reasonably necessary to protect those interests.
From https://www.pinsentmasons.com/out-law/news/uk-supr...
He should get advice from a lawyer who specialises in such things.
Super complex, but generally if you're not causing damage /loss to ex employer, it's unlikely you'll be at risk.
Don't go stealing business from ex-customers or poaching employees as a start, but it is hard if you're in sales as your old accounts, if you steal them, have demonstrated loss/cost. Then it's a case of how long is restricted period ok for. There was one contract I saw in insurance where a year was upheld as the insurance industry is a yearly cycle on renewals. Really depends on specifics, but if he plans to take his customer list and start selling then it would silly to think he'll not get a reaction...
Don't go stealing business from ex-customers or poaching employees as a start, but it is hard if you're in sales as your old accounts, if you steal them, have demonstrated loss/cost. Then it's a case of how long is restricted period ok for. There was one contract I saw in insurance where a year was upheld as the insurance industry is a yearly cycle on renewals. Really depends on specifics, but if he plans to take his customer list and start selling then it would silly to think he'll not get a reaction...
VEX said:
I (and he) thought that if non-compete clauses prevented you from doing what you do best then then under (then) EU rules, they are not enforceable, but we are not legal, we are sales men!
It is not quite as simple as that. Clauses can be reasonable and thus enforced. You really want to show it to an employment lawyer. That being said there is also the question of risk/reward i.e. how much it will cost an employer to try to enforce it and how much it is worth to them - if you are a salesman making millions they might be more inclined to want to stop you nicking their clients than if you were not making much......
Having just had this sort of discussion, the onus is on the company to prove the employee broke the non-compete agreement which can be expensive and the cost v return analysis means it is unlikely to be taken further than a snotty letter.
The other side of this is how specific the wording is, very specific clauses are easier to prove they have been broken.
These clauses get included in a lot of contracts as scare tactics rather than genuinely being there to protect the company from legitimate concerns.
The other side of this is how specific the wording is, very specific clauses are easier to prove they have been broken.
These clauses get included in a lot of contracts as scare tactics rather than genuinely being there to protect the company from legitimate concerns.
Thanks.
I think the friend is very scared of the company owner and with this hanging over him it makes it worse to try and work a route out.
He has in the past looked for routes out and the never found a employment lawyer he has confidence in, and that isnt because they won't tell him what he wants to hear. He wants positive solutions and directions to be able to get out.
I will ask if I can see a copy of the contract and see how wide the clause is.
V.
I think the friend is very scared of the company owner and with this hanging over him it makes it worse to try and work a route out.
He has in the past looked for routes out and the never found a employment lawyer he has confidence in, and that isnt because they won't tell him what he wants to hear. He wants positive solutions and directions to be able to get out.
I will ask if I can see a copy of the contract and see how wide the clause is.
V.
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