Is this non-compete / restrictive covenant normal or something to worry about?

[StacyFoxlove]

I would appreciate some perspective on two non-compete clauses in a contract I'm considering. I'm also seeking a legal perspective but would like to hear the thoughts of Mumsnetters.

I received a job offer that comes with a strict non-compete agreement. Part of that agreement states that I would have to:

a) Provide prospective employers with a copy of the agreement before accepting a future offer; and

b) Notify the Company prior to accepting the offer with the prospective employer.

I've included the clauses beneath my signature. The time periods mentioned refer to 6, 6, and 9 months respectively. That's AFTER terminating the contract. The contract also has a 3 month notice period.

Has anyone seen anything like this? I'm very nervous about this as it seems this would really hamper my ability to move companies should things not work out. While obviously I don't intend to switch employers, it's certainly something that happens.I can't imagine many companies being happy with the risk in this scenario.

I'm I right to be this concerned or is this fairly standard these days and my anxiety is running away with me.

I'd welcome the opinions of fellow Mumsnetters.

Thanks,
Stace

Clauses:

"The Employee must provide a copy of this Agreement to any prospective employer with whom the Employee intends to act as an employee, temporary worker officer, director, consultant or agent in any capacity during the longer of the periods referred to in clauses X, Y and Z above. For the avoidance of doubt, the Employee must provide the copy of this Agreement to any such prospective employer in advance of accepting any appointment to act in any such capacity."

"The Employee must notify the Company in writing of the name of any prospective employer with whom the Employee intends to act as a consultant, employee, temporary worker, officer, director or agent in any capacity during the longer of the periods referred to in clauses X, Y and Z above. Such notice must be given prior to the Employee accepting any such consultancy, employment, employment or other arrangement and must specify the title and duties of the role to be performed under that arrangement."

As well as showing a prospective employer the restriction (can't imagine that would be enforceable), what is the actual restriction itself?

Hi @flowery

Thank you for your reply. While I'm somewhat concerned about the non-compete (below), I'm more concerned about :

a) having to share the agreement with prospective employers. If I were an employer/small business, I'd run a mile.

b) the length of time it's in force for.

Here's the information you asked for.

"Competing Business" is defined as "any business or activity that competes or is preparing to compete with the Company’s or an Affiliate’s business activities (including any business or activity that the Company or an Affiliate is developing) in which the Employee has been directly involved to a material extent during the Relevant Period;"

X. During the Employee’s employment and until the expiration of 6 months from the Date of Termination the Employee will not directly or indirectly:

X.1. carry on or be interested in a Competing Business in any capacity (whether as an owner, partner, joint venturer, shareholder, investor or in any other capacity); or

X.2. act as an employee, temporary worker, officer, director, consultant or agent in any capacity in a Competing Business; save that he may be interested in securities in a company whose shares or other securities are listed, traded and/or dealt in on any market of a Recognised Investment Exchange provided that he does not hold (and is not interested in, directly or indirectly) shares or securities conferring more than three (3) per cent of the votes that could be cast at a general meeting of that body corporate.

Y. During the Employee’s employment and until the expiration of 6 months from the Date of Termination the Employee will not, directly or indirectly, and other than in the course of the Employee’s duties on behalf of the Company:

[Y.1 to Y.3 don't worry me]

Y.4. deal with any Supplier;

[Y.5 doesn't worry me]

Y.6. deal with any Business Partner;

[Y.7 doesn't worry me]

Y.8. become an employee of, or consultant to, or provide services to a Competing Business at the same time as or in the 12 months after any Key Employee is or has been employed by, become consultant of, or otherwise provided services to that Competing Business.

Finally, I'm asked to acknowledge that "the restrictions in clauses X and Y are necessary and reasonable to protect such Confidential Information."

In some industries for example these clauses are rigorously enforced and fiercely protected. Industry is going to give context.
DP works in F1 had a two year binding out clause in contract with last team. He now works in regulation and has a three year binding out for working for an individual team.
If there is intellectual property/technological advantage that you could take with you this would be an explanation.

I cannot see that they can enforce the telling prospective employers and telling them before you accept offers. What would they be able to do if you didn't?

Whether the restrictions themselves are enforceable depends very much on the role. The restriction is very wide - any competing employer, no restrictions on location or anything - for most roles that would be too broad and therefore not enforceable, but the example Lonecat gives of someone in F1 where any IP or technological knowledge going to a competitor could seriously damage their business, that would be different.

As I understand it these clauses vary hugely by industry in how easilly they can be enforced. In some fields I understand they have been deemed unenforceable, in others it’s less clear.

A family friend bound by similar clauses ended up being paid his salary for a year to take leave between jobs but that was a niche field (weapons systems) in which there would be very very few candidates of his nature.

Generally these clauses are very hard to enforce and rely on the employee being too scared.

When I've hired from rival companies and they've had a restrictive covenant we specifically wrote into their COE that we would cover any legal costs from a breach of contract.

They're only likely to find out from either:

A. A Reference
B. LinkedIn