Contract Change - Non Compete Clause

[NameChangePoP]

Hello, I'm hoping someone more knowledgable can help.

I've been in my current role for almost 12 months. It was a totally new industry to me.
We've just been given a new part to our contract to sign which is a non compete clause for 12 months after leaving.
In my original contract there is no such clause. A few people have left for competitors which is probably why they've introduced this.
The industry is quite niche, and there aren't hundreds of different companies to go to if you want to stay within the same industry.
I'm not in a senior position, more middle management I would say, so 12 months seems excessive if I were to leave and want to stay doing the same thing.
Can I ask the legalities of this clause being added, and if it's enforceable? Do I have to sign and if I don't is it just implied that I agree?
Also, they have backdated this to the beginning of Feb, but I was only sent it today - should I change the date if I do sign?

Thanks in advance.

Can you type out the wording of the non-compete?

It's a long one:

Restrictive Covenants

You agree with the Company that you will not directly or indirectly, whether alone or in conjunction with or on behalf of any other person or organisation and regardless as to the capacity of your involvement:

• Set up a business, or work for a business in any capacity, in direct competition with the Company within a 200 mile radius of any of our sites, for a period of 12 months from the date of termination of your employment.

• Within a 200 mile radius for a period of 12 months from the date of termination of your employment be engaged, concerned or interested in, or provide technical, commercial or professional advice to any other business which supplies, in competition with the Company, products or services which are the same as or materially similar to those products or services supplied by the Company and in which supply you were directly involved on our behalf.

• Within a 200 mile radius for a period of 12 months from the date of termination be engaged, concerned or interested in any business which at any time during the twelve months preceding the termination of your employment has supplied products or services to the Company or is or was at any time during the above period a client (defined as any person, firm, business or organisation to whom or to which the Company has within the above period supplied products or services and with whom you had personal dealings during this time) if such an engagement, concern or interest causes or may cause the supplier or client to either cease or materially reduce its supplies or orders and contracts to the Company.

• For a period of 12 months from the termination date, for the purpose of directly or indirectly competing with the Company (whether as principal, agent, employee, director, partner or otherwise), canvass, solicit, entice or otherwise approach any client (defined as any person, firm, business or organisation to whom or to which the Company has within a period of 12 months preceding the date of termination, supplied products or services or was at any time during this period a client with whom you had personal dealings) for the sale or supply of products or services or endeavour to do so.

• For a period of 12 months from the termination date solicit, induce or entice away from the Company or, in connection with any business in or proposing to be in competition with the Company, employ, engage or appoint or in any way cause to be employed, engaged or appointed any employee, director, consultant or representative of the Company who, by reason of his/her position and seniority, is likely to be able to assist or benefit a business in or proposing to be in competition with the Company in relation to any of its products and/or services.

So they make you redundant at some point in the future and completely stop you from working in your experienced area for a year? I imagine in that case the redundancy package in your contract is also absolutely amazing, right? Right? 😉
Anyway, sounds ridiculously restrictive, is this a UK company and also based in the UK? I think it’s worth you asking an employment law solicitor tbh, signing this could really screw your prospects up in the future.

I suspect this is not legally enforceable as it is too wide. But don't sign

Sorry to be clear I started typing before o read your update - restrictive covenants aren’t in and of themselves unfair/unenforceable but they have to be reasonable. So if you left if your own accord, set up your own business and immediately poached their best clients, that would not be acceptable. But, as I said, in the case of them making your position redundant (ie the role no longer exists within their business) it is unreasonable to expect that you are then not allowed to work somewhere similar for a whole year.

Uk company, but HQ is in Europe. Without being too outing, we're owned by a mother company in the EU. The UK side of the business is it's own entity though.

Are there any ramifications of me not signing? i.e. Will it be that as I continue to work there I'm accepting the changes regardless?

I remember an employment lawyer summed it up to me that they can’t force covenants that would prevent you from earning a living in your current profession. What they have written clearly would.

My main concern is that what if I'm headhunted to a competitor a year down the line with much better pay/prospects. I don't want to shut myself out of this industry and not be able to work in it again.

The agreement is completely unenforcable. It would effectively stop you from getting a job with a similar business anywhere in the UK. Even if you signed it, it wouldn't last 5 minutes in court if they tried to enforce it.

I once worked for an architectural practice who tried to enforce the same as it was so toxic that everyone left to work for competitors.

It was unenforceable and they ended up with a terrible Glassdoor reputation AND all the competitors knew about it and thought it was hilarious

Nobody signed it

True. We had the same advice, but they continued to say...

But it would come down to who has the bigger pockets to pay legal fees. It won't be enforceable but would you get that far by the time they'd tangled you up in legal costs?

If you don't sign but carry on working as normal then this will be taken as you accepting the contractual change. You have to explicitly say you don't accept the changes and are continuing to work 'under protest' until the issue is resolved. I would put this in writing.

Is there anything in your contract that says they will consult before any major changes. Has there been any consultation period? If not they could be in breach of contract.

As others have said restrictive covenants are not unusual but this seems to be entirely unreasonable.

Decline in writing - but be open to negotiation for additional remuneration now - or a guaranteed stipend when you decide to leave - if they wish to stop you from working for a competitor.

it’s not enforceable. But this looks like an HR / Legal nightmare if they decide to terminate on the basis of you declining to sign for no wonga.

I had exactly this scenario in November when made redundant. But mine was I couldn't operate in the UK at all. I am still job hunting but two lawyers and my union said they would have to take me to court to enforce it and the wait is longer than a year so I am Just ignoring it.

Fairly certain a previous company I worked for had this. Also a niche sector, I don’t think there was ever any

It’s common in my profession. They can’t make it so restrictive that you can’t earn a living where you are based which is what they’ve done here. I would refuse to sign and put in writing why. ACAS are really helpful for advice.
Mine is 20miles and 6 months I think.

Nothing in contract about consult before any major changes, and no consultation about this at all. Just emailed by HR and told to sign and return.

Would I be within my rights to ask them to pay for legal advice before signing? Doubt they'd agree though.

ACAS is free and extremely helpful

I've seen non-competes in settlement agreements, but never in an employment contract.

If they want to enforce 12 months of restrictions post-termination, then they need to pay you 12 months of salary and have a Garden Leave provision. It's really as simple as that.

Don't sign it unless they also offer to increase your notice period. And even then ... think carefully about whether you want to be bound by such a restrictive covenant. It may prevent you seizing opportunities that affect your career.

It is unlikely they will agree to pay for you to seek legal advice.

If they want to introduce this and you refuse to sign, they could terminate your employment. As you have only been with them 12 months, you would not be able to claim unfair dismissal. Alternatively, they could rely on the courts agreeing that you have accepted the change by continuing to work there.

Changing the date won't achieve anything.

However, if you do sign, this clause as written is unlikely to be enforceable. The test is whether it is reasonable. A restriction that lasts more than 6 months is unlikely to be reasonable unless longer is normal for your job title or industry. The restriction of 200 miles from any of their sites is also unlikely to be reasonable.

If you left and took up a role with a competitor, they would have to take you to court if they wanted to enforce this. If they did, it would be up to them to convince the court that this restriction was reasonable. I don't think they would succeed.

@prh47bridge would they also have to demonstrate actual monetary loss too? If it went to court would it be to recover the costs?

Thank you for your advice, as always it's gratefully received.

@Whoiscomingtosaveyou If they applied for an injunction to enforce the non-compete clause, they would not need to show any loss. If they wanted to recover damages, they would need to show that they had suffered a loss as a result of OP breaching the non-compete clause. Either way, I think they would lose on the grounds that the clause is unreasonable.

Getting advice from ACAS is a good idea.

I would be tempted to email HR saying, "I have taken legal advice about this proposed change to my employment contract and been informed that it is unenforceable as it would prevent me from earning a living in my current profession if I were to leave the company. As such, I have been advised not to sign it."

How long have you been in your current job?

Thank you, it’s useful to know.