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Employment contact clause help!

(13 Posts)
Halpingirl Wed 13-Jul-16 18:46:51

My husband works for a company and he would like to leave and set up his own business. His boss has gone bankrupt twice due to not paying his taxes and he runs the company really badly. A lot of the clients my husband works with say they would like to work just with him as the company is so chaotic and that he is the only reason they use that company.

Unfortunately in his contract it says:

'Upon leaving the company, it is understood and agreed that you will not approach or undertake work on a personal basis for any existing clients of this company, within a 20 mile radius of our office'.

We were wondering what this actually means and if it can be enforced? What if a client decides he doesn't want the work with the business and wants to get my husband to do it. Does he have to say no and is that forever as there is no timescale stated and also what exactly is 'existing customers' defined if the customers never use the company again if my husband leaves?

Any advice would be greatly appreciated - thank you!

redhat Wed 13-Jul-16 18:48:38

Any lawyer would need to see the contract to advise. Potentially it is enforceable. Your DH needs to speak to an employment lawyer. It will probably cost a couple of hundred quid.

mouldycheesefan Wed 13-Jul-16 18:49:04

It's usually for a specified period such as six months or a year.
It's unusual to only be for a radius of 2o miles though most businesses wouldn't specify a distance in their restrictive covenants.

redhat Wed 13-Jul-16 18:50:42

they would if they were reliant on local business.

It entirely depends on the nature of the business, the nature of the role plus the wording of the whole contact and also other factors such as whether its a standard clause in everyone's contract or particular to this person. I suspect the clause has a definitions section and is in numerous parts.

OllyBJolly Wed 13-Jul-16 18:50:50

What Redhat says.

His employer is entitled to protect his business. It seems a reasonable clause so I would imagine it is completely enforceable. As your husband is looking to take the clients away from his current employer, I would imagine the company would pursue. A lawyer will advise.

Halpingirl Wed 13-Jul-16 19:37:52

Thanks everyone! Do you think it is enforceable forever? So in 15 years if that customer decides to contact my husband he has to say no? We will book an appointment with a lawyer for further info. Thank you!

GreenSand Wed 13-Jul-16 19:50:53

If he set up 21 miles from the office, would that be outside the scope of the contract, and workable for DH?

redhat Wed 13-Jul-16 19:52:20

No, its definitely not enforceable forever. It can only be used to give reasonable protection to the employer's legitimate business interests.

If it literally just says exactly what you have typed (with no capital letters indicating definitions elsewhere) then it might not be enforceable since it is too open ended. Plus the lawyer will also consider things like whether your husband is approaching these clients because he knows them as a result of working for his employer. That's why an employment lawyer needs to see the whole thing and speak to your husband in far more detail (I'm an employment lawyer).

Halpingirl Wed 13-Jul-16 19:53:52

Well it actually says he can't approach customers or undertake work within a 20 mile radius of their office, so I think he can start a business within that but if any of the customers within 20 miles want to go to him instead they can't.

redhat Wed 13-Jul-16 19:55:11

I don't think its actually clear what it says.

This will work against the employer

Halpingirl Wed 13-Jul-16 19:57:53

Also wondering about the term 'existing clients' - what does this actually mean. If the client never uses the business again when my husband leaves are they still 'existing clients'? Thanks!

redhat Wed 13-Jul-16 20:07:18

That won't wash as an argument.

You need to keep in mind that what your DH is actually trying to do is take away someone else's business. He wouldn't be able to do this had he not worked for that business in the first place. The law is set up to protect the employer in this situation without unfairly restricting an employee and preventing legitimate competition. Your DH is intending to go out and act in breach of covenant. Unfortunately for his employer the clause doesn't look to be very well drafted (from what I can tell from the extract you've posted)

Halpingirl Wed 13-Jul-16 21:33:47

Yes we do understand and we wouldn't even be asking if the clients themselves hadn't specifically said 'If you ever go it alone we want to work with you and not the other business' - they said that before he had even thought of starting a business + the main reason he is thinking of leaving is because it is so badly run - for example his boss hasn't paid any of their suppliers - he has exhausted all the local suppliers and all their accounts are blocked. My husband then has to explain to the customer that he can't get the materials he needs for the job so the job can't be done on time. Very frustrating for both the clients and my husband.

My husband is quite happy to approach & find lots of new customers which I'm sure he will but it seems a bit mad that the other clients won't be able to use who they want to do the work for them because they are deemed to be 'owned' by the other business. Also they have specifically said they will stop using the the company he works for now anyway if he decides to leave.

I'm sure it will all work out ok but just checking our options. Thanks for your replies!

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