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Non compete clause being enforced, any advice please?

13 replies

Gapants · 05/12/2011 08:45

Ok, this is on behalf of my DH, he/we really need some employment law advice. He has a non-compete clause in his contract, we need to know, given his back story (details to follow) do they have a right to enforce the non-compete clause which states that I can?t work for a competitor for 3 months? And, if I just ignored it, would they realistically pursue it?

So MR GAPANTS writes--
For the past 6 months or so during PDPs (Personal Development Plans) my boss has been informing me that she thinks that there are things going on in the business that might involve movement/promotion for me. She said that I should try to hand over some work to colleagues, so that I would be more easily moved to a new position. At my most recent PDP she implied that she didn?t know whether anything would materialise when I pushed to be able to speak to the CEO or directors about their plans for me. She then advised that it might be a good time to look for an external job to use as leverage with my current employers.

This I did, I found a job advertised and got put forward for interview. I informed my boss of this and she said it sounded like a good job, but I was still keen to stay with my current employers.

When I got offered the position with the company I had interviewed with I spoke to my boss. She said I should take it, but as my current employers have a bonus scheme which would mean I would miss out on my bonus payment in March, I didn?t think I could make the sums add up - my wife goes to statutory maternity pay in April, so I need the bonus to see us through. I informed my recruiter that I was finding it difficult to make the sums add up, and she went back to the new company to see if they could move on salary or an up front payment.

My boss then called and said that she could pay me the bonus if I accepted the new job as she thought I had earnt it. She told me that she had had the offer authorised by a director. I relayed this information to my recruiter, who in turn told the new company. They informed us that there was now another candidate who they were waiting to interview. I informed by boss, so she withdrew her offer.

Next the new company asked me to do a psychometric test, which I completed. The following week I was offered the job once again, which I accepted once I received the offer letter. The messing about by my boss left me with no choice but to accept the position - the new job is a good one and the new company a really good one, but my loyalty still really lay with the old company.

I handed in my resignation, told my boss that I was regretful but gave my reasons, which she accepted. She said she would check whether she could renegotiate my bonus but wasn?t hopeful.

This week I have been handing over my accounts, and today I went in to the office to meet my boss. She brought the Director of HR in, and they told me I was being placed on immediate Garden Leave, which was great. They took my laptop and phone on the spot and then showed me my contract. I have a non-compete clause in my contract and they told me that they are going to enforce it. That would mean I can?t start the new job until 3 months after my 2 months of Garden Leave as the new company are in competition. Whilst I accept that this clause exists to protect the business, there are also clauses which state that I can?t deal with any of my current customers for 3 months which I think offer enough protection.

Bearing in mind only a few weeks ago they were actively encouraging my to leave by telling me that I could receive a bonus payment despite leaving, do they have a right to enforce the non-compete clause which states that I can?t work for a competitor for 3 months? And, if I just ignored it, would they realistically pursue it?

OP posts:
StillSquiffy · 05/12/2011 09:41

My understanding is that non-compete clauses are not generally enforceable because they breach your fundamental right of freedom to work.

I think they can be pursued if you are at a very senior level and the company can prove that you are using the expertise and contacts that you developed at company A to poach work and clients from company A to generate revenue at Company B.

It is however a very specialist area of employment law and the ruling would depend on exactly the work you do/clients you have. you should call a good employment lawyer and ask for advice - they will give you first 30 minutes free.

prh47bridge · 05/12/2011 10:08

Non-compete clauses can be enforced provided they are protecting a legitimate business interest and the restrictions go no further than is reasonably necessary to protect that interest. Contrary to StillSquiffy's comments they can be enforced against employees at all levels provided they are appropriate to the level. Of course, for some roles it will not be possible to enforce any non-compete clause - it would be pretty hard to justify a non-compete clause against the receptionist, for example.

It sounds like the OP's husband is in a role where a non-compete clause of some kind is likely to be enforceable to prevent him simply taking all his clients to a competitor. That does not necessarily mean that this non-compete clause is enforceable.

As StillSquiffy says, the OP needs to consult an employment lawyer to get proper advice.

LePruneDeMaTante · 05/12/2011 10:13

My understanding of non-compete clauses is that they apply if you are going to use information and contacts from your old job to set up a business in competition with your former employers, not just to move to another job.

Pagwatch · 05/12/2011 10:13

Non compete clauses are enforceable. Dh has had one wherever ge has worked for the last twenty years. Legal advice has always assured him that he could be sued and the clause is fully enforceable.

LePruneDeMaTante · 05/12/2011 10:15
Pagwatch · 05/12/2011 10:25
Grin

I think we x-posted prune.

It is linked to whether or not you would be in a position to nick clients - or use relationships you have establish at company A to transfer to company B.

StickyProblem · 05/12/2011 14:06

My industry has non-competes and we always used to think they were unenforceable...
A colleague recently got a new job with a competitor, was congratulated by the HR Director... then a few weeks later he was not leaving after all because my employer said they would enforce the non-compete (6 months), and the competitor withdrew the offer. The competitor was based in the US where non-competes are quite usual, and enforceable. This was all after everyone saying well done, sorry to lose you etc., then the very top boss said "hold on, isn't there a non-compete" and it started to get nasty. So I don't think, sadly, that the fact they were encouraging you to move on before they realised there was a non-compete in place would make any difference.
Sorry but you need specialist advice.

Gapants · 05/12/2011 15:45

pagwatch how has your DH managed to move companies then? This is what i am not able to understand...either have a long notice period where the "commercial risk" is lessened by not having current knowledge in the market place, or make it patentently plain that the non-complete clause will be enforced. It is not like people stay in one role with one company for life any more.

Thanks all for your input, we are looking to take some legal advice now and have also spoken to current employer about negotiating the terms of the clause.

My DH has protected all his current clients with his employer-- they are in pretty binding contracts themselves, so he could not poach them away anyway.

Feeling rather scared now!

OP posts:
Gapants · 05/12/2011 16:28

bump.

OP posts:
Pagwatch · 05/12/2011 18:26

Usually a compromise based upon gardening leave.
Last time dh handed in his notice, they sent him home that moment, he got paid 3 months notice at home and then 3 months non compete (cobtractually 6 months but they agreed to reduce it) where he is based at home, made no formal meetings with potential clients etc but does admin prep and preparation.

It was when I was pregnant. It was very nice.Smile

Pagwatch · 05/12/2011 18:27

That is very garbled but I hope it makes sense.

Gapants · 05/12/2011 19:17

pag thanks for getting back to me.

That is what he is trying to negotiate now, he has a 2m notice period, now on gardening leave, being paid, then 1m non compete clause..unpaid I guess, but was your DH paid for the last 3 months by his new employer?

We have a newborn, so in theory the time at home together would be heavenly, but we would like to know we can pay the mortgage and have a job to go to at the end of it all!

OP posts:
Pagwatch · 05/12/2011 19:22

No, he wasn't. We took the hit.

The thing is your dh may well find they want to compromise. Firstly they don't want the cost. Secondly if his business is one where people know each other they won't want the reputation of being a company who fuck you over when you try to leave - who would want to work for them!
The other thing is if they are known to enforce this then other companies will be obstructive when staff want to go to them iyswim

I wouldn't get too anxious. I am sure you can sort something out. Dhs business is particular because when he moves clients follow so companies have a motive for trying to stop that

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