Restrictive Covenants
Discussion
Looking for a little advice.
I've recently started a graduate role as a wiring harness engineer for a company supplying an automotive manufacturer. After six months, I've decided it's not for me. It hasn't got the technical aspect that I'm looking for that was apart of both my engineering degree and also my previous job in the industry which I did as part of my twelve month placement, which was incidentally working for the manufacturer I now supply.
I've recently been offered a job back at this same manufacturer as an Engineer in a completely unrelated capacity; HVAC. The issue I have is that when I've offered my resignation to my current employer they have told me that they will not allow this due to the restrictive covenant in my contract, which prohibits me from working for a list of companies (this particular manufacturer being one of them) for six months from termination of my employment. Now, having looked at the contract, it clearly states that I cannot work for this manufacturer "in a similar capacity". My question is whether or not this is enforceable. Could a HVAC engineer be considered a similar capacity to my current role?
I'm looking into getting some professional legal advice, but in the meantime I thought I'd offer the question up here.
I've recently started a graduate role as a wiring harness engineer for a company supplying an automotive manufacturer. After six months, I've decided it's not for me. It hasn't got the technical aspect that I'm looking for that was apart of both my engineering degree and also my previous job in the industry which I did as part of my twelve month placement, which was incidentally working for the manufacturer I now supply.
I've recently been offered a job back at this same manufacturer as an Engineer in a completely unrelated capacity; HVAC. The issue I have is that when I've offered my resignation to my current employer they have told me that they will not allow this due to the restrictive covenant in my contract, which prohibits me from working for a list of companies (this particular manufacturer being one of them) for six months from termination of my employment. Now, having looked at the contract, it clearly states that I cannot work for this manufacturer "in a similar capacity". My question is whether or not this is enforceable. Could a HVAC engineer be considered a similar capacity to my current role?
I'm looking into getting some professional legal advice, but in the meantime I thought I'd offer the question up here.
SantaBarbara said:
Are you a Graduate Apprentice?
It's a permanent role within the company, with a graduate level of pay until you have completed their graduate training program. But for the purposes of this question you can consider me a regular employee. I'm also within a probation period until the end of the year...
You have three arguments. The first is that the words "in a similar capacity" are too general to be meaningful. That argument would probably fail.
The second and better argument is that the new job is not similar to the old job. That argument might well succeed.
The third is that the covenant is an unenforceable bar on competition, but that argument would likely fail if as may be likely the covenant is underpinned by the existence of confidential information and/or trade connection that the employer wishes to protect.
If the employer pushes the point, you will need a paid and insured lawyer, not a car forum. PM me for some recommendations,
If anyone pops up here, or tells you in the pub, that restrictive covenants are never enforceable or that employers never sue on them, ignore that person!
The second and better argument is that the new job is not similar to the old job. That argument might well succeed.
The third is that the covenant is an unenforceable bar on competition, but that argument would likely fail if as may be likely the covenant is underpinned by the existence of confidential information and/or trade connection that the employer wishes to protect.
If the employer pushes the point, you will need a paid and insured lawyer, not a car forum. PM me for some recommendations,
If anyone pops up here, or tells you in the pub, that restrictive covenants are never enforceable or that employers never sue on them, ignore that person!
Breadvan72 said:
If the employer pushes the point, you will need a paid and insured lawyer, not a car forum. PM me for some recommendations,
Thanks for the advice. Could it also be argued that the restriction is disproportionate to the knowledge/experience I have in my current role? Of course, being a graduate of only a few months, I know very little about the engineering process, let alone the business model, so my knowledge of trade secrets etc is slim to none. This would be a different case for a senior engineer for example.The reasonableness of a covenant must be judged as at the date of its making, but it is permissible to take account of what confidential information the parties may reasonably expect the employee to acquire during the employment. The relative inexperience of the employee or the shortness of the period of employment would be factors that might influence the exercise of judicial discretion as to whether to grant an injunction, but would not affect the validity of the covenant itself.
On the facts that you describe, I think that the dissimilarity of the two jobs and the consequent lack of competitive overlap, combined with your relative juniority would probably incline a Judge against granting an injunction. I suggest that you write a polite but firm letter stating that you have taken advice and maintaining that your new employment will not breach the covenant.
On the facts that you describe, I think that the dissimilarity of the two jobs and the consequent lack of competitive overlap, combined with your relative juniority would probably incline a Judge against granting an injunction. I suggest that you write a polite but firm letter stating that you have taken advice and maintaining that your new employment will not breach the covenant.
Edited by anonymous-user on Tuesday 3rd October 06:40
Breadvan72 said:
On the facts that you describe, I think that the dissimilarity of the two jobs and the consequent lack of competitive overlap, combined with your relative juniority would probably incline a Judge against granting an injunction. I suggest that you write a polite but firm letter stating that you have taken advice and maintaining that your new employment will not breach the covenant.
Once again, thanks for the advice. I'll be sure to PM you for recommendations if it comes to that. For the time being I will look to meet with HR and present them with a letter as suggested. Cheers.Edited by Breadvan72 on Tuesday 3rd October 06:40
Just as an example of a similar(ish).
One global electronics company (A) offered a job to a senior engineer from another global electronics company (B).
The engineer worked at B in their floorcare business, and had a well written clear 12 month global restrictive covenant, one that had been enforced in the high court on previous occasions.
After the job offer, B contacted A and the engineer and reminded them of the terms of the restrictive covenant.
A & the engineer responded in the manner that BV72 has previously advised, in this case that the engineer would not be working in the floorcare business, but in an area that B was not present now or in the past. They was, and would be, no breach of the covenant.
B accepted this and it went no further. B are in general very happy to litigate, so it's not that they were averse to using the courts to fairly protect their business.
My experience inside large corporates is that they tend to to take a commercial view of the issues (although not always), if I had your case across my desk in previous roles then receiving the response as per BV72's guidance would have been enough for me.
It would have different if you had been working on a product launch and prior to it's release you left to try and join a direct competitor in the same product space
One global electronics company (A) offered a job to a senior engineer from another global electronics company (B).
The engineer worked at B in their floorcare business, and had a well written clear 12 month global restrictive covenant, one that had been enforced in the high court on previous occasions.
After the job offer, B contacted A and the engineer and reminded them of the terms of the restrictive covenant.
A & the engineer responded in the manner that BV72 has previously advised, in this case that the engineer would not be working in the floorcare business, but in an area that B was not present now or in the past. They was, and would be, no breach of the covenant.
B accepted this and it went no further. B are in general very happy to litigate, so it's not that they were averse to using the courts to fairly protect their business.
My experience inside large corporates is that they tend to to take a commercial view of the issues (although not always), if I had your case across my desk in previous roles then receiving the response as per BV72's guidance would have been enough for me.
It would have different if you had been working on a product launch and prior to it's release you left to try and join a direct competitor in the same product space
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff