Self employed contracting and anti compete clauses
Discussion
I'm a self employed contractor working primarily for one company. Due to numerous reasons, I no longer want to have anything to do with them anymore.
One of the reasons is I have hit a skills ceiling and my earning potential is limited by how much time I have. I'm thinking I want to give running my own company a try in a similar setup to the company I am leaving. Same field etc.
Due to the reasons I am leaving, other contractors that work for the company also want to leave and have said they are happy to work with me.
Additionally, I have had clients bugging me to take them on directly as they are equally dissatisfied with the company but they know me and trust me.
In my contract there is a clause that basically says 'all information regarding the company is private and not to be used by me in any way for a period of 12 months'
Also, 'that for 12 months, I agree to not contact or pursue a business interest that may be of conflict to the day to day business of the company'
Obviously I want to be able to inform clients I will no longer be working for my old company. These are companies I have been dealing with directly, on a day to day basis for years so I'd like to think they'd want to know where I've gone.
I was wondering how to go about this whilst taking advantage of restraint of trade and not incurring the wrath of my old company?
I don't really want to wait a year.
I suppose I can pursue clients the company has already lost due to their incompetence but it is other clients already with them that want me to take them on.
Additionally, if it matters, I was not responsible for bringing any clients on board directly. I just built up the relationships and my actions saved relationships in a few instances.
One of the reasons is I have hit a skills ceiling and my earning potential is limited by how much time I have. I'm thinking I want to give running my own company a try in a similar setup to the company I am leaving. Same field etc.
Due to the reasons I am leaving, other contractors that work for the company also want to leave and have said they are happy to work with me.
Additionally, I have had clients bugging me to take them on directly as they are equally dissatisfied with the company but they know me and trust me.
In my contract there is a clause that basically says 'all information regarding the company is private and not to be used by me in any way for a period of 12 months'
Also, 'that for 12 months, I agree to not contact or pursue a business interest that may be of conflict to the day to day business of the company'
Obviously I want to be able to inform clients I will no longer be working for my old company. These are companies I have been dealing with directly, on a day to day basis for years so I'd like to think they'd want to know where I've gone.
I was wondering how to go about this whilst taking advantage of restraint of trade and not incurring the wrath of my old company?
I don't really want to wait a year.
I suppose I can pursue clients the company has already lost due to their incompetence but it is other clients already with them that want me to take them on.
Additionally, if it matters, I was not responsible for bringing any clients on board directly. I just built up the relationships and my actions saved relationships in a few instances.
Customers are not prisoners. They are free to chose with whom they want to do business. Direct poaching is always frowned upon but if a customers decides on their own volition to switch to a new supplier (which could be you), there is little that their previous supplier can do to stop them.
Eric Mc said:
Customers are not prisoners. They are free to chose with whom they want to do business. Direct poaching is always frowned upon but if a customers decides on their own volition to switch to a new supplier (which could be you), there is little that their previous supplier can do to stop them.
Come on Eric you're slipping. The issue is that the OPs current employer can/may be able to prevent him working with these companies (depending on his current contract). It doesn't matter if they want to work with him, he can't work with them (potentially).OP: you need proper advice: ask BV for suggestions for somone who you can engage. What is your operating mechanism? Sole Trader or Limited Company? I doubt you can pick up these clients without pissing off your current employer.
Eric Mc said:
He isn't an employee.
Restraints to trade are very difficult to successfully apply.
BV72 & his learned friends make a very good living out of this issue. The OPs' current client just need to start on the legal treadmill & he'll soon find himself spunking out £400 an hour for advice; that's why he needs to get some now so he knows where he stands with his current contract terms. Maybe they are full of holes & he can carry on with impunity. Maybe they are well written & he'd be advised to tread very carefully. If the OP is operating as a limited company then it's possibly a commercial contract rather than an employment one & it's not difficult to have onerous terms in those. Restraints to trade are very difficult to successfully apply.
The first question is is he a Sole Trader (in which case his house is on the line) or is he a Limited Company (so his liabilties may be limited). If he's a company he could, for instance, just start up a new company to work with his new clients. Maybe that would work, but the OP needs qualified advice.
It's up to the OP to be a lot more precise in his explanation of the situation.
He certainly seemed to be intimating that he was self employed i.e. not an employee. On that basis, the sole trader v' limited company scenario kicks in.
If the business he was contracting with wanted to treat him as if he was an employee because they wanted to make a breach of contract stick, then why didn't they hire him as an employee in the first place so they could place far more restrictions and controls over his actions.
Could it be they wanted the advantages of him not being an employee when it came to tax and employment regulation but wanted to treat him as an employee when it came to protecting their own interests?
He certainly seemed to be intimating that he was self employed i.e. not an employee. On that basis, the sole trader v' limited company scenario kicks in.
If the business he was contracting with wanted to treat him as if he was an employee because they wanted to make a breach of contract stick, then why didn't they hire him as an employee in the first place so they could place far more restrictions and controls over his actions.
Could it be they wanted the advantages of him not being an employee when it came to tax and employment regulation but wanted to treat him as an employee when it came to protecting their own interests?
My brother had a similar clause in his contract when he changed companies.
He took some legal advice, he didn't 'pursue' any of his existing clients or approach them directly after he moved, but he did tell them he was leaving and going to another company as part of a professional farewell...
Many followed him, there were no repercussions.
He took some legal advice, he didn't 'pursue' any of his existing clients or approach them directly after he moved, but he did tell them he was leaving and going to another company as part of a professional farewell...
Many followed him, there were no repercussions.
Thermobaric said:
To clarify.
Currently a sole trader, not an employee. Plan is to start a Limited Company.
Honestly you need proper qualified advice. The outcome would depend on several factors, the first of which is how well the the contract you have is written & the second would be how badly your ex-client wants to persue the matter. If your're taking his clients then he may be pretty motivated. As a ST the ex-client would be sueing you personally so you could lose everything.Currently a sole trader, not an employee. Plan is to start a Limited Company.
If you actively seek these clients you could be in trouble.
If you play dumb and let them come to you apparently without you having made any overt approaches to them, it looks a lot better.
As you were engaged as a sole trader and not an employee, the operation you were working far have far less control over your destiny than a mere employee. Indeed, one of the tests of "employment status" is the element of direction and control an employer has over employees.
Conversely, a genuinely self employed sole trader should not be subject to the same level of control. If an "employer" tries to exercise this level of control over you AFTER you have severed connection with you, he could be on a sticky wicket.
Did you have a written contract?
What did it say in the contract about you seeking your own business? After all, a self employed individual should be free to seek work independently.
If you play dumb and let them come to you apparently without you having made any overt approaches to them, it looks a lot better.
As you were engaged as a sole trader and not an employee, the operation you were working far have far less control over your destiny than a mere employee. Indeed, one of the tests of "employment status" is the element of direction and control an employer has over employees.
Conversely, a genuinely self employed sole trader should not be subject to the same level of control. If an "employer" tries to exercise this level of control over you AFTER you have severed connection with you, he could be on a sticky wicket.
Did you have a written contract?
What did it say in the contract about you seeking your own business? After all, a self employed individual should be free to seek work independently.
This is what I'm trying to establish how to do the right way.
Surely I'm not to be expected to just say 'I'm leaving XXX now, bye'. I'd like to be able to say 'you can find me at blahblahblah.com if you require my services'
They're not exactly difficult clients to find, a simple Google and you'll get a list. It's not like I would be using any insider info/company secrets.
I do have a written contract.
One of the clauses is that 'you will often often work for other companies or individuals at your own discretion'
That's the only relevant clause in the agreement other than the two I put in OP.
Surely I'm not to be expected to just say 'I'm leaving XXX now, bye'. I'd like to be able to say 'you can find me at blahblahblah.com if you require my services'
They're not exactly difficult clients to find, a simple Google and you'll get a list. It's not like I would be using any insider info/company secrets.
I do have a written contract.
One of the clauses is that 'you will often often work for other companies or individuals at your own discretion'
That's the only relevant clause in the agreement other than the two I put in OP.
Thermobaric said:
This is what I'm trying to establish how to do the right way.
Surely I'm not to be expected to just say 'I'm leaving XXX now, bye'. I'd like to be able to say 'you can find me at blahblahblah.com if you require my services'
Do that, and you'll likely find a lawsuit slapped on you faster than you can imagine. Even giving them your linked-in profile could be considered to be poaching. Maybe your current client won't care, but that's a pretty blatant customer-grab in anybody's book and if there's significant revenue at stake then I wouldn't expect many companies to take it lying down.Surely I'm not to be expected to just say 'I'm leaving XXX now, bye'. I'd like to be able to say 'you can find me at blahblahblah.com if you require my services'
If you're striking out on your own, then strike out on your own. If you're any good then you'll find your own customers, at least for the first 12 months.
It depends on your engagement and contacts.
When you say you're a self-employed contractor, do you mean you operate through your own Limited Company as the owner/director? Strictly speaking you're not self-employed and, if you don't want Eric MC constantly bugging you about the distinction (sorry Eric), then you need to get out of the habit of calling yourself "self-employed".
So, if you are "in business on your own account", operating through a company, and provided your contract is a Contract of Services (ie. business-to-business), not a Contract of Service (ie. an employment contract), then there is less the client can do. They would be guilty of Restraint of Trade if they tried to stop you.
Also, you could wind up your current company, start a new one, and then legitimately claim that the contract with your current client is with the old company. Provided the contract does not name you personally, and does not seek to impose an anti-compete clause on you personally rather than your company, then I don't see how it could be enforced.
As I said, this is just a layperson's opinion and is worth everything you paid for it.
When you say you're a self-employed contractor, do you mean you operate through your own Limited Company as the owner/director? Strictly speaking you're not self-employed and, if you don't want Eric MC constantly bugging you about the distinction (sorry Eric), then you need to get out of the habit of calling yourself "self-employed".
So, if you are "in business on your own account", operating through a company, and provided your contract is a Contract of Services (ie. business-to-business), not a Contract of Service (ie. an employment contract), then there is less the client can do. They would be guilty of Restraint of Trade if they tried to stop you.
Also, you could wind up your current company, start a new one, and then legitimately claim that the contract with your current client is with the old company. Provided the contract does not name you personally, and does not seek to impose an anti-compete clause on you personally rather than your company, then I don't see how it could be enforced.
As I said, this is just a layperson's opinion and is worth everything you paid for it.
Edited by Clockwork Cupcake on Monday 8th October 21:52
Thermobaric said:
One of the clauses is that 'you will often often work for other companies or individuals at your own discretion'
Wait, what? You signed that? The corresponding clause in the kind of contracts I enter into would say
"This Agreement is not exclusive; the Client acknowledges that the Consultancy enters this Agreement in the course of its business of providing services to its customers, and the Consultancy is and remains at liberty to also provide services to third parties; it is the Consultancy’s responsibility to ensure it does not enter any third party engagement which might cause a conflict of interest to arise. The Client is and remains at liberty to engage services (including similar services) from third parties. The Consultancy reserves the right to decline to provide any advice and assistance outside the scope of the Services as specified in Schedules agreed between the parties, even if the Consultancy may previously have provided such additional advice and assistance."
Eric Mc said:
I think the OP clarified he was operating as a sole trader rather than through a limited company.
Ah, ok. I must have missed that. In that case, everything I wrote was b
ks. Or, rather, not really applicable. Oops. 
As a Sole Trader, you are far more bound personally by the contract.
Gassing Station | Jobs & Employment Matters | Top of Page | What's New | My Stuff