Non-compete clauses

[Output Flange]

Are they enforceable?

My OH is changing jobs, and the current employer is saying that she must adhere to her non-compete clause.

A while back, there was a question over whether these clauses were enforceable. Has there been precedent set on this?

She's taking advice, but thought I'd pick the brains on here.

[Magic919]

The legal guys on here say they _are_ each time it gets discussed.

[The Beaver King]

There have been quite a few threads on this in the past.

The general concensus these days is to spend a few hundred quid with a solicitor who knows employment law and get them to give the contract the once over.

There are usually ways out of them, but it needs proper legal advice to navigate it properly.

BreadVan is the main guy on PH, although I haven't seen him post in a while. I imagine he'll probably suggest the above.

[xjay1337]

I remember reading a thread where some guy selling windows or something couldn't get another job and ended up in a big brutal legal battle (not fun).

In the end it worked out for him but cost him a lot of ££.

[Europa1]

Yep, paging Breadvan72, paging Breadvan72...

As I understand it, it will all turn on the extent/reasonableness of the restrictions. As the poster above says, a few hundred quid on a seasoned employment lawyer would be a good investment.

[Magic919]

JustinP1 is more likely to respond than BV these days.

[anonymous-user]

It depends on the precise wording of the clause, taken in context when read with the contract as a whole, and any other relevant circumstances.

As an example, an advice from a solicitor and counsel on the following said it was very likely unenforceable;

Non Compete Clause said:

12.3 In order to protect the Confidential Information and business connections of the Company to which he has access as a result of the Employment, the Employee covenants with the Company that he shall not:

12.3.1 for 6 month after termination, be involved in any capacity with any business which is (or intends to be) in competition with the employer

This was believed unenforceable because the restriction is too wide in terms of "any capacity". It would mean the restrained person couldn't even work as a cleaner at a company competing with the employer.

Each and every situation is different. Spend a few pennies on some qualified advice, as an injunction and costs associated would be a pretty awful way to start and finish a new job.

[Output Flange]

Thanks all for the input.

Funnily enough the clause in question reads very much like this:

janesmith1950 said:

Non Compete Clause said:

12.3 In order to protect the Confidential Information and business connections of the Company to which he has access as a result of the Employment, the Employee covenants with the Company that he shall not:

12.3.1 for 6 month after termination, be involved in any capacity with any business which is (or intends to be) in competition with the employer

And as mentioned in the OP, this bit:

janesmith1950 said:

Spend a few pennies on some qualified advice

is also underway. Fingers crossed it works out in her favour.

[Jasandjules]

It depends on the circumstances. Duration, terms and even what position your wife holds in the company. But yes they ARE enforceable as a matter of law, subject to reasonableness and so on. There are lots of cases where they are upheld, and a number where they are not..... Therefore taking advice taking advice as to the exact terms is prudent.

I just wish people would look at these clauses when they join a company and negotiate accordingly.

[shep1001]

I went through this recently with my new contact negotiation when I changed business units in the company I have worked for since I left school. Basically it went back & forward between HR & the legal team who eventually decided that a robust non-compete clause on its own, after the end of my employment, would be unenforceable as it would be deemed too restrictive. Their answer was to set the NC clause in parallel with a notice period they extended by 12 weeks to 9 months which would be served on garden leave, unless it was an internal transfer within the company.

Best advice is to take paid (insured) advice.

Edited by shep1001 on Wednesday 10th August 15:43

Edited by shep1001 on Wednesday 10th August 15:45

[xjay1337]

shep1001 said:

I went through this recently. Basically it went back & forward between HR & the legal team who eventually decided that a robust non-compete clause on its own would be unenforceable as it would be deemed too restrictive. Their answer was to run the NC clause in parallel with a notice period they extended by 12 weeks to 9 months which would be served on garden leave, unless it was an internal transfer within the company.

9 months garden leave? I would not sign up for that! Finding new work would be almost impossible, unless you are director/CEO level.

[Terminator X]

Advice for next time, don't sign up to them and/or get a job somewhere else where it's not required. Job suicide effectively as you're unemployable until the prescribed period is up.

TX.

[feef]

I used to work for a place that took on two sales guys from a competitor. The wording of their contracts with their previous employer was that they were not permitted to contact any of their existing clients.

So the place I worked bought every copy of the Yellow Pages in the country, they highlighted all the companies that they wanted to, but weren't technically able to contact and told the other two sales guys the names of who to speak to.

Technically, they didn't contact their customers,

[shep1001]

xjay1337 said:

9 months garden leave? I would not sign up for that! Finding new work would be almost impossible, unless you are director/CEO level.

I am only a technical gimp but customer contracts are worth millions and run from 3-5yrs+ each. My notice period was already at 6 months but its a very small incestious industry I work in (when dealing with the big consumers) so my value to the company is probably greater than an equivalent job in another industry. Having been there 25 years next year I am perfectly comfortable with a long notice period, not interested in working for anybody else as my T&C's are good, I enjoy the work and my bosses are a plane ride away, who generally let me get on with what I have to do without giving me too much grief.

[no1knows7]

I thought I would add to this as there is a lot on this topic.

I currently work in sales and I am in the process of moving to our main competitor.

I have a non compete clause in my contract - the problem is we share 90% of the same clients / agencies. My non compete is 6 months so I wouldn't be able to do my new job. Technically I wouldn't be able to speak to clients who already buy from my new company under this clause.

If we share clients and contacts already would I be able to speak to them even under this non compete clause?

Any help would be great.

Cheers

[A205GTI]

I had this, In Sales mine said no to contacting customers for 6 months, even though I knew them from my previous employment, but they stated anywhere in the country which I thought would be unenforceable. Did not hear anything from that.

They did however try to do me for contacting a colleague to come and join. (they claimed I had signed a nda when I asked for a copy never heard anything again)

if your worried talk to a lawyer, IMO depends on how high up the food chain you are and the company

[anonymous-user]

no1knows7 said:

I thought I would add to this as there is a lot on this topic.

I currently work in sales and I am in the process of moving to our main competitor.

I have a non compete clause in my contract - the problem is we share 90% of the same clients / agencies. My non compete is 6 months so I wouldn't be able to do my new job. Technically I wouldn't be able to speak to clients who already buy from my new company under this clause.

If we share clients and contacts already would I be able to speak to them even under this non compete clause?

Any help would be great.

Cheers

Please set out the precise terms of the clause.

[anonymous-user]

feef said:

I used to work for a place that took on two sales guys from a competitor. The wording of their contracts with their previous employer was that they were not permitted to contact any of their existing clients.

So the place I worked bought every copy of the Yellow Pages in the country, they highlighted all the companies that they wanted to, but weren't technically able to contact and told the other two sales guys the names of who to speak to.

Technically, they didn't contact their customers,

On the likely assumption that the covenants said "directly or indirectly", as they usually do, that was an undetected breach of the covenants.

[andygo]

A pal of mine is thinking about going freelance rather than salaried. He knows his market extremely well, having been involved for some 30 years. He will easily double his money, but would likely have to talk to existing clients in his sales role. Most of them will likely call him as he is well known.

However his latest contract of employment sent to him has various non compete clauses within in. He hasn't signed it (was a couple of years ago) and there was absolutely no consultation period or discussion mooted at the time generally.

Is an unsigned contract enforceable?

[Jasandjules]

andygo said:

A pal of mine is thinking about going freelance rather than salaried. He knows his market extremely well, having been involved for some 30 years. He will easily double his money, but would likely have to talk to existing clients in his sales role. Most of them will likely call him as he is well known.

However his latest contract of employment sent to him has various non compete clauses within in. He hasn't signed it (was a couple of years ago) and there was absolutely no consultation period or discussion mooted at the time generally.

Is an unsigned contract enforceable?

In my view it is likely that it would accepted that he has affirmed the contract by continuing to work without complaining about those terms.