Restricted business in contract - what can they do?

[SpeckledlyHen]

I am in the process of looking for a new role. I had never noticed previously when I signed the contract in my current role (many of us didn't notice) that there is a restriction clause in it saying that I can't work for another company in the same area of work for 12months.

Where your employment is terminated by reasons of a Voluntary Termination, you agree that in order to protect the legitimate business interests of "company name" you shall not for a period of twelve months after the Termination Date either on your own account or by or in association with any other person directly or indirectly engage in or be concerned with a Restricted Company in the Restricted Business

Added to this clause is a list of the restricted businesses with their names.

Can this be upheld and would my current company be likely do anything? The reason for asking is I am applying for a company on the list of restricted businesses. A colleague went to this company a few months ago, however she threatened to sue for bullying and harassment and as part of the negotiation for a settlement agreement she got the clause waivered. However, I know other colleagues have moved on and gone to similar or associated companies.

The issue I have is I work in a really niche industry, everyone knows everyone. In fact I have already worked at 4 companies that are listed as restricted. Surely this is an illegal restraint of trade? I have been in this industry for 30 years and it is all I know. They surely can't stop me working for a competitor can they? It is not a sales related job but project related.

You certainly can not ignore it
You need to take advice from an employment solicitor
It is very wide so may not be enforceable
Are you aware of any colleagues having left and gone to competitors

You need legal advice.

for binding out clauses to be valid they need to be reasonable, not prevent you working in your field even if it is niche and for a reasonable length of time ( more than a year would be difficult) it's a bit like pre nups if not reasonable they won't even be considered in a divorce case
ie to say for instance you are a dentist saying you can't work at another practice within 5 miles for a year would be reasonable if you worked in a small market town 5 miles would not be reasonable in the centre of birmingham but a mile might be. it would also be reasonable to say that you can't encourage patients or staff to leave with you though if someone asks specifically you can say I am moving to town X
a clause could not stop you getting a job so if you leave voluntarily or not you must not be stopped getting a new similar job so say you work in vaccine research you could not be stopped getting another job in vaccine research
there can be clauses to avoid industrial espionage and to avoid taking data or details of patents / research/ results
if a binding out clause is not reasonable legally it is void ie nothing not replaced by something reasonable so companies have to be careful, so saying going back to the dentist they said 20 miles for 5 years, if they lost a case which they would they could not then stop them setting up next door

Thank you. Yes a colleague went to the same competitor recently but she negotiated that clause to be removed specifically as part of a settlement agreement. This wouldn’t be the case for me.

Thank you all for your responses. Very helpful. I will seek advice from an employment lawyer, was tempted to ignore it but I won’t now.

If the clause is so restrictive that it prevents you from working for 12 months I.e. you could ONLY ever do your job at one of these other companies then it would unlikely to be enforceable. Given that a colleague had this clause waived you can also argue that if they can waive it for one then it’s obviously not that important (assuming you work in the same role).

It also depends on your role. If you are, say, an accountant then you could get a job at a multitude of other companies so the clause would be fair. If you are a brain surgeon then you could only work in a hospital doing brain surgery (a daft example but you get the point).

Speak to a lawyer but these clauses are rarely enforceable if they prevent you from working.

@BookwormButNoTime that’s very helpful. Yes me and the colleague do exactly the same role. Arguably the job itself can be done for many different types of industries (project management) but it’s the industry specific domain knowledge that makes it easier to do/understand. I guess it’s like saying I work as a PM in a niche pharmaceutical industry. Yes I could go and be a PM in construction because the job role/title is the same but I wouldn’t have the domain knowledge in construction to do the job effectively.

Unless you are super senior, 12 months is unlikely to be enforceable against you - in fact, depending on what the employment lawyer says I'd be tempted to leave it as is (rather than argue to reduce it down to 3 or 6 months) because then the whole thing would be unenforceable (because it's unreasonable and not proportionate to protect the business) and therefore there would be no period of restriction at all.

To add to the above comments which I agree with, if they want you not to work for a competitor for a reasonable amount of time then they pay you for this time whilst you are not able to work. Gardening leave. Common in lots of industries. My husband left his old job where they gave 6month restriction but only 3 paid and lawyers at his new role sent one letter stating it was unreasonable to prevent him from working and that was it, he was able to crack on.

@TheWayOfTheWorld @swishswashswoosh thank you both for your contribution. Excellent advice and comments that are making me feel better about the clause.

You need advice
I know of a case where this WAS enforced very robustly so while a lot of companies won’t bother some do

Just to add to the already excellent advice you've had here, CI advise that blanket restriction clauses are normally viewed in quite a dim light by the relevant authorities because they are often an attempt to prevent a former employee working in the field at all, which is clearly not reasonable.

And yes @swishswashswoosh says, they have to pay you during this time.

Thank you all. Got a first interview tomorrow and will see how that progresses but am definitely going to be seeking advice from professionals.