[Archived] Anyone know much about Employment Law?

[joey_big_nose]

Hi guys,

Currently I work for a technology consultancy. I have been with a client for around six months - all my work is with the client, the client highly values me, its a great environment to work in. My employer makes a considerable amount of money for my work of which I "see" (in terms of my salary) a small percentage. I had hoped that this would be increased significantly in light of the rave reviews and promotions I have received at the client. This does not look like it is going to happen. My client has approached me to say they will employ me directly (without me soliciting them) for the money I want.

Tricky bit is this. My contract with my employer stipulates:-

"

POST TERMINATION OBLIGATIONS

After termination of your employment appointment you will not directly or indirectly, either alone or on behalf of any other person and whether on your own account or in any other capacity whatever

1) Be engaged, concerned, or interested whether as an employee or in any other capacity in carrying on any business in competition with the company within, or is based within, Europe or South America

2) Approach canvass, solicit or otherwise act with a view to enticing away from or seeking in competition with the company the custom of any person who at any time during the period of 12 months preceding the termination is or has been a customer of the Company and during such period they shall not use their knowledge or influence over any such customer to or for their own benefit or the benefit of any other person carrying on business with the company

3) Employ, approach canvass or solicit for the employment any person who is a director or employee of the company

You acknowledge that each of the undertakings given above is reasonable and for the proper protection of the business of the company and further acknowledge that damages may not be an adequate remedy to the company for the breech of these undertakings.

"

On one level it seems water tight. On the other hand - after reading around on the internet - it seems like a lot of unenforceable balls designed to scare employees into not leaving for better remuneration at competitors...

Does anyone know about/have experience of this sort of thing....?

[dazmaz]

I may very well be completely wrong on this but your current contract's clauses are there to protect your employer and the company. What does work in your favor is those clauses are a blanket restriction and a court may rule in your favor due to that - could be seen as your employer preventing you from furthering your career or even earning a living away from them

My advice would be, speak to someone who works within employment law, that way you know 100% that some random dude/dudette isn't feeding you bogus info. You may be able to get a bit of free advice from an employment law solicitor on the matter (as it could generate a case for them)

[Baz]

Pretty much unenforceable unless they can prove that you have financially cost them money, such as if you move to a competitor and nick their customers. Standard terms and conditions really.

[joey_big_nose]

Pretty much unenforceable unless they can prove that you have financially cost them money, such as if you move to a competitor and nick their customers. Standard terms and conditions really.

Fair point but I couldn't they claim that by me leaving their employ and working for the client directly I am effectively costing them money as they can no longer charge the client to fill my role....? And I am effectively in competition with them?

[Paul]

I am NOT qualified to answer but have experience of this. I was once asked to sign a similar contract and refused on the basis it was too restrictive and prevented me from working and would be unenforceable. I offered to sign if I got six months salary, the period of my clause, on leaving or the clause had to be taken out. The clause was taken out.

I don't think it's enforceable but you should take professional advice.

[dave birch]

If you are working for an agency, and they hire you out to a particular company, they would and should expect some recompense if you decided to work for that company on a permanent basis.

Usually the company would have signed an agreement to that effect. It will be along the lines of .... If you leave the agency to work for the hiring company, then the hiring company would pay (say) twelve months of the fee that they would pay ordinarily.

Without knowing the ins and outs of that contract, I'd say that it's entirely enforcable.

However, if you left the contracting company and went to work for an organisation not party to any agreement, then they would have no recourse.

[Willie Eckerslike]

Hi Joey

My wife works in a senior HR role and is qualified in employment law. I sent her your post for her comments and this is her reply.

Bit wordy but hope it helps...

Companies are legitimately allowed to protect their business hence post-termination restrictions. However can be very tricky to enforce as much comes down to precise wording and whether it covers exactly what is happening at the time. This is difficult to wrap up in a general clause as often will depend on role, seniority, circumstances at the time. Always comes down to whether the clause is “wider than is reasonably necessary” Massive amount of case law on this area and v difficult to give a general opinion as each case determined on its own merits and never quite the same circumstances. General position is that anti-compete clauses are unenforceable but they can be if worded correctly and reasonable for the circumstances at the time. In my opinion:

1. Unlikely to be upheld as geographical area way too wide. To say he can’t work in competition anywhere in Europe or South America would seem totally unreasonable UNLESS their business is very highly specialised and only one or two other companies doing it. But this type of clause cannot mean “if you don’t work for us you can’t work for anyone else”. Similarly If the employee’s skills are specialised or sector specific then to say he can’t work for a competitor means he cannot work – this will not be upheld.
2. This is the main applicable clause. However 12m usually seen as too long and this will make the clause void (i.e. a court cannot say it’s ok but only for 6m). BUT depends on his seniority and importance of his role to his employer whether him moving to the client means all the current employer’s business with them is lost (do they have other contractors there, will they retain some custom from them etc) if not then what actual damage have they suffered – if this is limited then may not be commercially worth them taking legal action etc. Again, expressly including the word “competition” could go against the employer. Each case decided on its merits as depends on how many other customers they have, the employees seniority etc.
3. Not applicable in this situation

Remedy available: His employer could apply for an injunction to stop him moving pending a full hearing (re breach of contract). If no real damage has been or is likely to be suffered and it the court thinks the employer’s request is vindictive in any way they won’t grant an injunction. If the case gets to hearing and employer wins they will be awarded damages (can only be compensation for actual (proven) loss). The part where it says “damages may not be an adequate …..” is rubbish since damages is the only remedy they can seek. The employer may also seek damages against the client company for inducing breach of contract.

No easy answer I’m afraid. People can’t expect employers not have any protection but it can only be “reasonable” and cannot prevent them working.

What might be more applicable in his type of role is for the guy to check his contract for confidentiality and intellectual property clauses. He cannot expect to be able to disclose trade secrets or confidential system stuff even after termination. These will be much more likely to be upheld.

[joey_big_nose]

I am awed by the helpfulness and knowledge of people on this site. Thankyou everyone, particularly Willie and his wife. You are heros!!!

[Ricky]

How big is the agency you are working for. If it's fairly large they may not even bother checking where you have gone after finishing with them.