Work: Would you breach your contract?

[barry_abs]

this is pissing me off..

i've just handed my notice in at Company A.. Company B, down the road, are currently a customer of Company A.. Company B want me and have offered a very lucrative, 12 month contract - all ready to go and sign.

HOWEVER! in working for Company B, i'd breach two of my contract constraints with Company A:

"Thou shalt not work with 20 miles of our office"

"Thou shalt not work for one of our customers"

What are my chances of getting this job? Are these constraints worth the paper they are written on?

 

[zhao]

i'd say go for it. if B wants you they'll ignore the small type (if they even know about it). if you are on relatively good terms with A i doubt they would go to the trouble of suing you.

 

[IdleRich]

Are these constraints worth the paper they are written on?

I had a job once where I had a similar contract, well, I was supposed to be barred from working in the same industry for one year - I've never heard that thing about being barred from working within 20 miles of their office, would that apply even if you were doing something totally different?
Anyway, I was told that such a contract was probably not legally enforceable but in the industry most companies tended to respect the contracts drawn up by their rivals, presumably so that theirs in turn would be recognised. I've no way of knowing if this was true but, either way, most people who left the company did tend to leave it a year before getting another similar job.

 

[barry_abs]

I've never heard that thing about being barred from working within 20 miles of their office, would that apply even if you were doing something totally different?

the rule is i cannot work for another company that could be conscrued a rival, with 20 miles, within 12 months.. in other words - another company in the same field.. the general consensus is: this rule is horseshit.

the second rule, however, may cause my a few issues.. it can be worked around, but i'll need to create a limited company (again).. i'm hoping working through an umbrella will get me round it..

 

[Leo]

while i understand why companies try to protect themselves, i can't imagine company a would risk pissing off a PAYING CLIENT (company b) by suing a person that the client wanted to hire. it's like shooting yourself in the foot.

would be a much smarter move for company a to maintain and leverage a good relationship with an ex-employee who now works at a client in order to potentially increase their own business.

 

[Edward]

Sorry I don't know the answer but I have to say I'm utterly shocked by this. How can they presume to tell you what to do after you finish working for them?

I would be very surprised if they had any legal grounds to do this, unless you are about to go and give Coke's secret recipe to Pepsi or MI5 secrets to the KGB.

Mind if I ask what kind of work it is, out of curiosity?

 

[barry_abs]

while i understand why companies try to protect themselves, i can't imagine company a would risk pissing off a PAYING CLIENT (company b) by suing a person that the client wanted to hire. it's like shooting yourself in the foot.

would be a much smarter move for company a to maintain and leverage a good relationship with an ex-employee who now works at a client in order to potentially increase their own business.

excellent point.. though i fear my boss (being a prick) would sooner engage war than take the common-sense approach of the latter..

 

[barry_abs]

Mind if I ask what kind of work it is, out of curiosity?

IT, system architect.

 

[Chef Napalm]

Sorry I don't know the answer but I have to say I'm utterly shocked by this. How can they presume to tell you what to do after you finish working for them?

Which is precisely why these types of clauses are deemed unenforceable.

 

[bassnation]

IT, system architect.

ok, I'm an architect too. i am mostly self-employed but occasionally take a perm job when i want training or if its an opportunity to move forward in another way. i am doing exactly the same, jumping ship to go and work for one of their clients.

firstly, you don't HAVE to tell them where you are going. i certainly haven't with my latest move.

secondly, restrictions such as not working within 20 mins of their office and not working in the same industry are utterly UNENFORCABLE. there have been test cases on this kind of thing, and an employer cannot restrict your ability to work within your chosen field. if they do decide to sue, they will lose.

go ahead and do it. what could they possibly hope to gain? its not like they can sue you into staying with them. empty threats is all it is.

my advice would be to avoid umbrella companies at all costs - the govt. are cracking down on them taxwise and you will lose out. set up a ltd company which you can use for decades - when i stop being self employed for a while i just put it on ice.

 

[barry_abs]

hi bassnation, sorry for delayed response - wanted to get my legal advice first..

firstly, you don't HAVE to tell them where you are going. i certainly haven't with my latest move.

i'd like that option but *they'd know*..

secondly, restrictions such as not working within 20 mins of their office and not working in the same industry are utterly UNENFORCABLE. there have been test cases on this kind of thing, and an employer cannot restrict your ability to work within your chosen field. if they do decide to sue, they will lose.

go ahead and do it. what could they possibly hope to gain? its not like they can sue you into staying with them. empty threats is all it is.

well, i had my advice and the solicitor found loads of holes in the restraining clauses.. however, it is still very risky and whether i'd win could come down to the particular judge on the day..

essentially, Company A would definitely sue as B is their biggest client.. if i lost, i'd be in a spectacular pile of shit.. we're talking silly money in loss-of-earnings charged for 2-3 years..

the advice given to me was to get B to provide imdemnity, covering my ass if was sued OR to tell A my wishes to work for B and come to some out-of-court settlement..

set up a ltd company which you can use for decades - when i stop being self employed for a while i just put it on ice.

BTDT.. i'm not a fan - i hate the administrative burden, i'm bone.. i'll consider it again if the take-home is far better..

 

[nomadologist]

your lawyer is most likely telling you to do what would make him money. i don't think any company with admins in their right mind would actually sue you for this--it simply wastes too many of their own resources--unless you work in government intelligence or something.

 

[juanatg]

secondly, restrictions such as not working within 20 mins of their office and not working in the same industry are utterly UNENFORCABLE. there have been test cases on this kind of thing, and an employer cannot restrict your ability to work within your chosen field. if they do decide to sue, they will lose.

No offence, but this really isn't correct. Whilst restraint of trade clauses were - centuries ago - considered void on a prima facie basis, thanks to an abundance of case law which has developed particularly in the past couple of hundred years, there are a number of circumstances where they are perfectly legitimate.

Restraint clauses are judged valid or invalid based on three issues - whether there is an interest to protect, whether the restriction is reasonable and whether it conflicts with the public interest to restrict your future employment. The law recognises two main types of interest - trade secrets and customer connections. Restraint of trade isn't allowed merely to protect against competition, but they can stop you working for a direct competitor to protect trade secrets or solicitation of customers.

Then there's the issue of reasonableness - this falls under a further three issues: Geographical, employment area and the duration of the clause. The geographical area can't be too wide, merely enough to protect business interest. Contractually, you can be restricted from working in the same employment area if there is an interest to protect, but the courts have struck down clauses where the employment area is too wide or not relevant to the interest in need of protection. Finally, the duration of the restriction comes into play, this is very much on a case by case basis. According to Cheshire, Fifoot & Furmston, “the burden on the covenantee to prove the reasonableness of the covenant is increased by the absence of a time limit, but it by no means follows that a restraint for life is void”.

The X factor in all this is that the validity of the clauses pretty much always relies on the specific circumstances and the way that the clauses is drafted, so I can't really make any comment on barry_abs' case. I just felt like I had to pipe in because a lot of what's been said here re the validity of restraint clauses is incorrect. The solicitor's advice looks pretty sound, erring on the side of caution is probably the best thing to do where it's murky like that.

 

[barry_abs]

The solicitor's advice looks pretty sound, erring on the side of caution is probably the best thing to do where it's murky like that.

you're essentially repeating what my solicitor said.. the clauses ("cannot work for a competing business *in any capacity* within 20 miles" and "cannot endeavour to solicit away any customer business") are very broad and there are many arguments against them..

the chances of me losing the case in court would be quite low.. however, the penalty if i lost the case would cripple me for life.. i don't fancy that risk - there are, after all, other jobs in the sea.

in response to a previous post, my boss definitely would sue! this is a small company with just 3 employees, he stands to lose a great deal if i steal that business.. he once sued a previous employee for taking 2 days holiday without approval, during his notice period.

Company B are approaching my boss (Company A) in an attempt to release me amicably, offering rewards in other areas.

 

[Woebot]

good luck with this barry_abs.

-

there's all kinds of shit one has to put up with dealing agencies as a freelancer as well. the uk government regulations say (if i remember correctly) that you can't work for a company that an agency has introduced you to for at least a year...

however one (slightly annoying) agency i'm now getting work from made me sign a contract saying i couldn't work for any of "their clients" for in perpetuity. it's a heap of horse-shit really. i suspect after eighteen months i'll simply approach the clients directly (if i like the companies- some of them just wouldn't be worth establishing a relationship with!) and take my chances.

i hate agencies!

 

[bassnation]

No offence, but this really isn't correct. Whilst restraint of trade clauses were - centuries ago - considered void on a prima facie basis, thanks to an abundance of case law which has developed particularly in the past couple of hundred years, there are a number of circumstances where they are perfectly legitimate.

Restraint clauses are judged valid or invalid based on three issues - whether there is an interest to protect, whether the restriction is reasonable and whether it conflicts with the public interest to restrict your future employment. The law recognises two main types of interest - trade secrets and customer connections. Restraint of trade isn't allowed merely to protect against competition, but they can stop you working for a direct competitor to protect trade secrets or solicitation of customers.

Then there's the issue of reasonableness - this falls under a further three issues: Geographical, employment area and the duration of the clause. The geographical area can't be too wide, merely enough to protect business interest. Contractually, you can be restricted from working in the same employment area if there is an interest to protect, but the courts have struck down clauses where the employment area is too wide or not relevant to the interest in need of protection. Finally, the duration of the restriction comes into play, this is very much on a case by case basis. According to Cheshire, Fifoot & Furmston, “the burden on the covenantee to prove the reasonableness of the covenant is increased by the absence of a time limit, but it by no means follows that a restraint for life is void”.

The X factor in all this is that the validity of the clauses pretty much always relies on the specific circumstances and the way that the clauses is drafted, so I can't really make any comment on barry_abs' case. I just felt like I had to pipe in because a lot of what's been said here re the validity of restraint clauses is incorrect. The solicitor's advice looks pretty sound, erring on the side of caution is probably the best thing to do where it's murky like that.

not doubting your knowledge, but this kind of thing happens all the time in my field, and no-one ever sues.