Contract Clause Wording question - seems very odd!
Discussion
I am just reading through an employment contract and have come across this wording in respect of a Restrictive Covenant clause and it seems a tad ridiculous.
The parties agree that each of the restrictions contained in clause xx is reasonable and necessary as between themselves and to protect the Company’s reasonable interests. If, however, any of them is found by a court to be unreasonable or unenforceable but would be reasonable and enforceable if certain words were deleted or added, then the restriction will apply with those words deleted or added as appropriate.
As that is essentially saying (to this layman at least) if any of these clauses is not quite right as we didn't use the rights words - then we can simply say ... ahh well they were meant to be different words and therefore that are ok so gottcha!
Isn't the point of the wording of clauses of legal documents that they are specific and not just open to some sort arbitrary on the spot re-wording and re-interpretation?
The parties agree that each of the restrictions contained in clause xx is reasonable and necessary as between themselves and to protect the Company’s reasonable interests. If, however, any of them is found by a court to be unreasonable or unenforceable but would be reasonable and enforceable if certain words were deleted or added, then the restriction will apply with those words deleted or added as appropriate.
As that is essentially saying (to this layman at least) if any of these clauses is not quite right as we didn't use the rights words - then we can simply say ... ahh well they were meant to be different words and therefore that are ok so gottcha!
Isn't the point of the wording of clauses of legal documents that they are specific and not just open to some sort arbitrary on the spot re-wording and re-interpretation?
akirk said:
fairly normal
it is basically saying - you agree the principle, don't be pedantic about the wording
This.it is basically saying - you agree the principle, don't be pedantic about the wording
Seen it before.
Whether the non-compete itself is reasonable for the role* that the employee is undertaking is another matter entirely...unreasonable contract clauses don't tend to withstand scrutiny where one party (employer) has much greater negotiating power.
* Sales roles, and some executive roles usually are considered reasonable, back-office roles far less frequently.
The context is a recent hire at a senior level has this restriction in her contract but wants to hire one of her previous plus ones from her old role.
The wording on her contract says in one clause that she cannot employ any employee for 12 months - which is seemingly too wide and unreasonable from what I have read, as the company she is coming from employs 2500 people.
I am going to put it out to our legal folks tomorrow but I was just curious if that very generic "any" would then be allowed to be revised to something that meant say her plus ones using that clause or is the simple blanket use of any making the restriction too wide and therefore invalid.
Might help me knock off a few hours of conversation with our legal folks at some eye watering hourly rate if I can get a bit of context up front.
Ta - ONW
The wording on her contract says in one clause that she cannot employ any employee for 12 months - which is seemingly too wide and unreasonable from what I have read, as the company she is coming from employs 2500 people.
I am going to put it out to our legal folks tomorrow but I was just curious if that very generic "any" would then be allowed to be revised to something that meant say her plus ones using that clause or is the simple blanket use of any making the restriction too wide and therefore invalid.
Might help me knock off a few hours of conversation with our legal folks at some eye watering hourly rate if I can get a bit of context up front.
Ta - ONW
New appointees hiring people from a prior role is not unusual.
However, it’s THEIR contractual obligation to their old company, not their new employers, who never entered into that contract.
The normal approach is for the new role to be openly advertised externally with a specific skill set matching the target person, through a single recruiting agency, and for them to randomly apply for it.
A clause like that (which references a second clause) can't be used to change the underlying meaning of the clause it references, it is simply a method of ensuring that it survives if a court would otherwise throw it out on a technicality...
so the clause you reference in the original post is irrelevant - the key is - what is the underlying meaning / intent of the clause it references?
And there are some suggestions above about how you may deal with it - non-compete clauses can be upheld, and can be thrown out - the general deciding factor is probably more around the circumstances rather than the clause wording... so if someone's job prospects are being hindered to the extent of making it difficult for them to find work, then such a clause might be removed by a court (e.g. you work for a niche company and are told you can't work for a competitor for 12 months post leaving - that could stop you earning a living v. you work as a receptionist and are told that you can't work for a competitor but there are still 26,000 other companies you could work for - clause would be upheld).
so the clause you reference in the original post is irrelevant - the key is - what is the underlying meaning / intent of the clause it references?
And there are some suggestions above about how you may deal with it - non-compete clauses can be upheld, and can be thrown out - the general deciding factor is probably more around the circumstances rather than the clause wording... so if someone's job prospects are being hindered to the extent of making it difficult for them to find work, then such a clause might be removed by a court (e.g. you work for a niche company and are told you can't work for a competitor for 12 months post leaving - that could stop you earning a living v. you work as a receptionist and are told that you can't work for a competitor but there are still 26,000 other companies you could work for - clause would be upheld).
oldernotwiser said:
The wording on her contract says in one clause that she cannot employ any employee for 12 months - which is seemingly too wide and unreasonable from what I have read, as the company she is coming from employs 2500 people.
I’d think this would be to hedge against any “no poaching” type clause in her previous employment contract? If the clause doesn’t exist, she can probably freely try to hire.Will be interesting to hear what your legal folks say about it - I’m curious if I guessed correctly!
Edit: sorry, yes - this seems to be in her previous contract, not the current one? She’s agreed not to poach - whether it’s enforceable (or will see the company try to enforce) probably depends on how crucial the person she wants to bring over is…
Edited by DanL on Thursday 27th January 10:03
There is some confusion here. If I have got it right (sorry if not), the clauses in question are from the old employment contract, not the new one. The question isn't about non-compete (a minefield) but about non-hiring/poaching (doesn't have anything like the same unknowns as non-compete).
However, it's still very hard to enforce non-hiring clauses. You can't stop those people applying for jobs. And you can simply organise it to happen if you want to, or have a friendly word with the old employer if the relationship is good.
The wording quoted is almost certainly of no interest and shouldn't take any time being discussed with the lawyers. Non-hiring should also not take long to discuss with the expensive emplyment lawyers either!
However, it's still very hard to enforce non-hiring clauses. You can't stop those people applying for jobs. And you can simply organise it to happen if you want to, or have a friendly word with the old employer if the relationship is good.
The wording quoted is almost certainly of no interest and shouldn't take any time being discussed with the lawyers. Non-hiring should also not take long to discuss with the expensive emplyment lawyers either!
Hol said:
New appointees hiring people from a prior role is not unusual.
However, it’s THEIR contractual obligation to their old company, not their new employers, who never entered into that contract.
This. Her current contract is designed to cover her leaving and then hiring someone from her current company where obviously they don't want her to take their employees with her. It's not designed to cover people from her old role. The relevant contract will be the one of the person she wants to hire (or indeed her old contract if it has the same clause).However, it’s THEIR contractual obligation to their old company, not their new employers, who never entered into that contract.
Sorry - yes it is her previous contract.
She wants to hire a person who used to report to her in her old role and these clauses are in her old employment contract.
It just seems very OTT and just against things like the right to work etc that you can put a clause in person A's contract that stops any person B from a company person A used to work at applying for an advertised role and then being accepted in that role in said new company.
The general gist here is she is on good terms and left with glowing praise for the work she had done etc - but if she does this, she thinks her old CEO's attitude will change very quickly and he can be a bit "volatile and emotional on occasion" were her words.
She wants to hire a person who used to report to her in her old role and these clauses are in her old employment contract.
It just seems very OTT and just against things like the right to work etc that you can put a clause in person A's contract that stops any person B from a company person A used to work at applying for an advertised role and then being accepted in that role in said new company.
The general gist here is she is on good terms and left with glowing praise for the work she had done etc - but if she does this, she thinks her old CEO's attitude will change very quickly and he can be a bit "volatile and emotional on occasion" were her words.
Ok - no poaching. I’d have thought this is reasonably standard.
In practice they wouldn’t seek to enforce it to prevent “any” employee from company A joining company B. They probably would want to use it to try and stop her poaching a key/senior person who used to work with or for her. After all, that person might be part of the transition plan, and their loss could be damaging for company A…
Whether the clauses as written are enforceable is one for your lawyers.
In practice they wouldn’t seek to enforce it to prevent “any” employee from company A joining company B. They probably would want to use it to try and stop her poaching a key/senior person who used to work with or for her. After all, that person might be part of the transition plan, and their loss could be damaging for company A…
Whether the clauses as written are enforceable is one for your lawyers.
oldernotwiser said:
I am just reading through an employment contract and have come across this wording in respect of a Restrictive Covenant clause and it seems a tad ridiculous.
The parties agree that each of the restrictions contained in clause xx is reasonable and necessary as between themselves and to protect the Company’s reasonable interests. If, however, any of them is found by a court to be unreasonable or unenforceable but would be reasonable and enforceable if certain words were deleted or added, then the restriction will apply with those words deleted or added as appropriate.
As that is essentially saying (to this layman at least) if any of these clauses is not quite right as we didn't use the rights words - then we can simply say ... ahh well they were meant to be different words and therefore that are ok so gottcha!
Isn't the point of the wording of clauses of legal documents that they are specific and not just open to some sort arbitrary on the spot re-wording and re-interpretation?
[Lawyer mode but not your lawyer]The parties agree that each of the restrictions contained in clause xx is reasonable and necessary as between themselves and to protect the Company’s reasonable interests. If, however, any of them is found by a court to be unreasonable or unenforceable but would be reasonable and enforceable if certain words were deleted or added, then the restriction will apply with those words deleted or added as appropriate.
As that is essentially saying (to this layman at least) if any of these clauses is not quite right as we didn't use the rights words - then we can simply say ... ahh well they were meant to be different words and therefore that are ok so gottcha!
Isn't the point of the wording of clauses of legal documents that they are specific and not just open to some sort arbitrary on the spot re-wording and re-interpretation?
It’s referred to as a blue pencil clause (ie the judge might take a blue pencil to a clause). It’s designed to make contracts workable where one non-material thing might otherwise have scuppered the lot.
It’s been around for over a century and is generally accepted drafting.
Of course looking at a clause in isolation doesn’t say anything about whether it actually works in the context of the contract. You’d need to seek legal advice for that…
[ /Lawyer mode and still not your lawyer]
OMITN said:
oldernotwiser said:
I am just reading through an employment contract and have come across this wording in respect of a Restrictive Covenant clause and it seems a tad ridiculous.
The parties agree that each of the restrictions contained in clause xx is reasonable and necessary as between themselves and to protect the Company’s reasonable interests. If, however, any of them is found by a court to be unreasonable or unenforceable but would be reasonable and enforceable if certain words were deleted or added, then the restriction will apply with those words deleted or added as appropriate.
As that is essentially saying (to this layman at least) if any of these clauses is not quite right as we didn't use the rights words - then we can simply say ... ahh well they were meant to be different words and therefore that are ok so gottcha!
Isn't the point of the wording of clauses of legal documents that they are specific and not just open to some sort arbitrary on the spot re-wording and re-interpretation?
[Lawyer mode but not your lawyer]The parties agree that each of the restrictions contained in clause xx is reasonable and necessary as between themselves and to protect the Company’s reasonable interests. If, however, any of them is found by a court to be unreasonable or unenforceable but would be reasonable and enforceable if certain words were deleted or added, then the restriction will apply with those words deleted or added as appropriate.
As that is essentially saying (to this layman at least) if any of these clauses is not quite right as we didn't use the rights words - then we can simply say ... ahh well they were meant to be different words and therefore that are ok so gottcha!
Isn't the point of the wording of clauses of legal documents that they are specific and not just open to some sort arbitrary on the spot re-wording and re-interpretation?
It’s referred to as a blue pencil clause (ie the judge might take a blue pencil to a clause). It’s designed to make contracts workable where one non-material thing might otherwise have scuppered the lot.
It’s been around for over a century and is generally accepted drafting.
Of course looking at a clause in isolation doesn’t say anything about whether it actually works in the context of the contract. You’d need to seek legal advice for that…
[ /Lawyer mode and still not your lawyer]
Some of the detail of their reply: -
Post-termination restrictions will always be unenforceable unless they are no longer or wider than is reasonably necessary to protect the employer’s legitimate business interests (“LBIs”). LBIs will be narrowly construed – customer connections, stability of the workforce, confidential information etc. This means they have to be as narrowly defined as possible and specifically tailored to the individual, role and business. These are nowhere close to that, however, these are the major holes (and they really are major!):
No definition of employee. This means that both the non-solicitation and non-engagement clause would prevent any employee of the business (even eg a cleaner or office junior admin assistant) from taking employment somewhere else, regardless of whether they are material to the business or their departure would cause damage to the employer, which is a draconian impact on that employee and not restricted to what is reasonably necessary for the employer’s LBIs. So, unless xxxxxxxx only has eg 10 employees and they’re all critical, this will be too wide.
No material dealings caveat. Even with an employee definition, you would expect a non-solicitation/employment provision to be restricted to those employees with whom the departing employee has had some level of contact/dealings in the 12 months before departure. There is no such caveat here, which is likely to make it too wide in itself because it would prevent you recruiting someone even if xxxxxx has no knowledge of them from her time with xxxxx and that cannot be reasonable.
So in conclusion, these restrictions seem to be far too widely (and poorly) drafted to be enforceable.
Which is good news for us!
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