Restrictive Covenants
Discussion
Hypothetical situation, but let's say an employment contract mentions that:
For 12 months after termination, an employee may not in competition with the Employer, accept orders for Services from any Restricted Client or have any business dealings concerning Services with any Restricted Client.
If the employee has left the Employer, how enforceable would this be? I can understand that the employee may not canvass or solicit business from a client they have had dealings with whilst employed by the Company, but is it reasonable to expect them to turn down potential orders?
Would this be considered as a restriction to trade?
For 12 months after termination, an employee may not in competition with the Employer, accept orders for Services from any Restricted Client or have any business dealings concerning Services with any Restricted Client.
If the employee has left the Employer, how enforceable would this be? I can understand that the employee may not canvass or solicit business from a client they have had dealings with whilst employed by the Company, but is it reasonable to expect them to turn down potential orders?
Would this be considered as a restriction to trade?
All depends on context, but in principle that sort of restriction could be enforceable. What is the nature of the job and business? What is the contract's definition of Services and Restricted Client?
Bloke in pub will be along in a minute to say that these types of clauses are never enforced, but he will be wrong. I do this sort of thing for a living.
Bloke in pub will be along in a minute to say that these types of clauses are never enforced, but he will be wrong. I do this sort of thing for a living.
Breadvan72 said:
All depends on context, but in principle that sort of restriction could be enforceable. What is the nature of the job and business? What is the contract's definition of Services and Restricted Client?
Bloke in pub will be along in a minute to say that these types of clauses are never enforced, but he will be wrong. I do this sort of thing for a living.
It's a recruitment business.Bloke in pub will be along in a minute to say that these types of clauses are never enforced, but he will be wrong. I do this sort of thing for a living.
Restricted Services are "any services, products or goods supplied, sold, produced or developed by the Employer with which you were involved to a material extent during the 12 months immediately preceding the Termination Date or services, products or goods of a similar kind.
Restricted Client means "any person to whom the Employer supplied Restricted Services at the Termination Date or during the 12 months immediately preceding the Termination Date and with whom or which you had business dealings during such period or with whom or which any employee under your control shall yo your knowledge have had business dealing during such period."
I hope that helps.
I've previously left an employer I had a restricted covenant with for 6 months. The employer shouted a lot about enforcing the covenant so I spoke to more lawyers than I'd normally care to and the unilateral consensus was that it would be enforceable if I went on to work for anyone I'd had contact with through that employer. Some thought 6 months would be about the limit if it went to court.
Never tested it as instead of going direct to one of their customers I worked for one from home via an intermediary. Still, can't see me signing a contract with one in again.
Never tested it as instead of going direct to one of their customers I worked for one from home via an intermediary. Still, can't see me signing a contract with one in again.
You are incorrect. In some case, a clause restraining working for a competitor will be enforced, as an aid to protecting confidential information or trade connections. I regularly conduct cases for employers and employees in which such clauses feature, and they are quite often upheld. All depends on the precise business context and the precise wording of the clause.
A 12 month EMEA-wide restraint would have to be justified by a sufficient business interest of the employer, and might be too wide, but it would in principle be enforceable, dependent on circumstances.
A 12 month EMEA-wide restraint would have to be justified by a sufficient business interest of the employer, and might be too wide, but it would in principle be enforceable, dependent on circumstances.
Edited by anonymous-user on Sunday 23 September 09:47
The Court does not test a clause to destruction by positing extreme examples. There is no real competition between BMW and a push bike manufacturer.
A wide restraint on a relatively junior employee would be hard to justify. A senior employee may, however, be subject to quite a wide restraint.
A wide restraint on a relatively junior employee would be hard to justify. A senior employee may, however, be subject to quite a wide restraint.
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