Anyone here have any knowledge of these?
If so could you drop me a PM please, cheers.
I have no legal experience but had always been lead to believe they are worthless, at least if your talking employer / employee, something to do with denying some bodies right to earn, if your talking about it being linked to the sale of a business I would expect that's a different matter
I use non-competition clauses in commercial property contracts, albeit specific to the end user (my employer)
They aren't worthless. The previous employer has to demonstrate some genuine loss, which is pretty hard. Top salesman going to a direct competitor and taking big customers with them would do it.Originally Posted by Exigeowner
Very difficult to prove - often used as a 'prejudicial' parting shot.
When you look long into an abyss, the abyss looks long into you.........
If it's an employer/employee related issue then you could ask your prospective employers legal department to look at your current contract and give you some advice. I recently moved roles to a 'competitive' company and did this. The advice I got was that non compete clauses are virtually unenforceable as per the post above but it's worthwhile getting a lawyer to read over your specific clause
I had to sign paperwork every year that I wouldn't move to a competitior (30 mile radius)or of a similar business type within 6 months of termination of employment. In reality guys came and went all the time to competitors (seeing as I live in an area with about 20 main car dealers in a small area) and nothing was ever done or followed up on.
I'm sure in most cases employers choose not to enforce it because it isn't worth the hassle, it doesn't make enough difference. By contrast a friend who left my place of work a year ago had to do 9 months gardening leave before being allowed to join a competitor.
Gardening leave is different, you are still technically an employee and presumably he was being paid.
It's just a matter of time...
Not quite, he would have been free to work for a non-competitor but he would have forfeited a large payment due to him if he had started work at the competitor he was joining.
Basically if your former employer wants to stop you from going to the competition he has to pay you during this time.
'Against stupidity, the gods themselves struggle in vain' - Schiller.
One of my customers went through this - if you are a small guy going out on your own then they certainly have an effect as legal letters require a response although the advice was much along the lines of you can’t be stopped making a living so just had to “discover” who the good potential customers are again eg by cold calling suitable businesses. Conclusion was if he had moved to a big rival company with a legal department then it would have been completely worthless but for a small company the threat of legal action can be very off putting.
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I used to work for an American company. They were quite litigious in this area. I know of several ex-employees who were sued as a result of breaking non-compete clauses. They like to set an example for current employees who are considering this.
If it's a big company (as my ex-employer was) they will have an internal legal department full of lawyers who are sitting around looking for something to do. Plus, they really wanted to dissuade current, specialised employees from leaving and joining competitors.
It may be different in the UK though.
Suggest that you obtain formal legal advice. Non-compete clauses are enforceable if properly drafted and apply post-termination of employment. There is no obligation for payment during the period they apply; gardening leave is when you are still an employee and are asked not to come to work during your notice period
Any clauses in a contract have to be "mutually disdvantageous" to be enforcible.
That means if a company has a non compete clause it has to have a time limit and it has to disadvantage the company as much as the employee. This usually boils down to money.
I was put on half time a few years ago. My employer hit a dry patch but they knew they would not be able to replace me easily if I left or was made redundant. As part of the deal they told me I could work for other companies. My response was to tell them I as already well within my rights to do that anyway.
They then said fine but they needed to check that there was no conflict of interest involved with the outside work and they would therefor need to vet any work I was doing.
My response was that my outside clients were entitled to confidentiality and that if my employer wanted to dictate what I did with my unpaid time outside the company they would have to pay me for it.
The onus was on them of proving any conflict of interest. I had no requirement to prove to them there was no conflict of interest and it was their problem not mine.
They backed down.
Only anecdotal.
I have dealings with a fairly big name (UK) company who are quite protective/litigious, and there was an example of an someone setting up in competition despite a non-compete clause. They sent a couple of legal letters, but in confidence, someone told me that they were unlikely to take it any further, since an injunction would be costly (about £10k?), and wouldn’t be enforceable for long anyway (I think it was one year). Not sure about the accuracy of this to be honest, as the person wasn’t in the legal dept, but they were dealing with this particular conflict.
Effectively, unless there is a huge amount of money at stake, it’s just not worth it even for large companies. (It does sound like US companies are a bit more likely to “make an example” of someone though).
I know of examples of two small businesses being in similar situations, and I think here the recevied knowledge of the clause being unenforceable seems to apply, simply because of the potential cost/reward of trying to enforce them is too high.
That said, I wouldn’t like to bet my house on trying it on against a big company though.
Not a lawyer, but I'm pretty sure that only applies to the whole contract, not single clauses. Otherwise the following contract would be unenforceable:
Clause 1: You pay me £100.
Clause 2: I send you a watch worth £100.
Each clause is individually disadvantageous to one party and advantageous to the other. Binding those clauses together is the entire point of contracts.
Hence a non-compete clause is generally enforceable (within the limitations imposed by statute) as long as the contract says something to the effect of "and also by agreeing to this we will pay you for work you do at a rate we think is more than fair to compensate for it" (whether that is actually true or not). Even if you only accept £1, you'd have to show that it wasn't fair compensation for the non-compete clause and that you were effectively coerced into agreeing to it in the first place. Otherwise you presumably accepted it was fair at the time the contract was signed.
So for example, if you have a noncompete period of 6 months then perhaps 3 months full pay is fair compensation. Perhaps the contract says you get paid at 25% more than you would have otherwise, and the noncompete period starts at zero and increases by half a day for each day of the first year's employment. Those are equivalent, except that with the 25% higher pay you're better off after the first year. Now prove in court that whatever you were actually paid was not more than you would have been paid if the noncompete clause had been struck out during the salary negotiations.
Incidentally, the legal term for this balancing of value in contracts is "consideration". The law requires that consideration exist in order for a contract to be enforceable, but it does not require that it be completely fair, just that the parties agree to it at the time. For instance, the following alternative contract is still perfectly legal:
Clause 1: You pay me £1.
Clause 2: I send you a watch worth £100.
This is fine as long as we both agree at the time that it's a fair exchange. By signing a contract, we are stating that agreement in legal form. I can't come back later and say "that watch was worth more than you paid, please pay me another £99".
Assuming no coercion, the only thing you can't do is agree to something illegal. For example, if the noncompete amounts to effectively selling yourself into slavery (i.e., you would be unable to find any work in your profession and thus be forced to work for the same employer forever, no matter the conditions) then that would be unenforceable simply because that clause is illegal per se.
Also, if your employment terms were changed at some point and you had no opportunity to refuse the noncompete clause (even if you were given something in return, like a pay rise), then it would be unenforceable because contracts have to be negotiable in order to ensure both parties agree they are fair. You can't attach a rider like a noncompete clause to something you would have got anyway, like an annual pay rise or a minor performance-related promotion. But if you were offered a promotion into a new role and one of the conditions of that promotion was a noncompete clause, you had the opportunity to negotiate or refuse and therefore, it is binding.
This is a pretty good rule of thumb for all contracts. It's easy to get caught up in the details when in reality, if often doesn't matter. More often than not, contracts are just the business world equivalent of a cat arching its back to look bigger. 90% of them are boilerplate that was copied and pasted by somebody's secretary and have never been within 10 feet of an actual lawyer.
OP: there is a considerable amount of ignorant & potentially expensive (for you) advice spouted by posters when this topic is discussed on a forum. If you genuinely need advice then you could start by contacting this poster on the Pistonheads forum:
https://www.pistonheads.com/gassing/...emberId=223288
He is one of the pre-eminent QCs in this field & may well give some initial free advice & will certainly suggest some suitable legal contacts depending on the depths of your pockets. He can appear brusque in tone & reserves particular disdain for those who post from a position of deep ignorance on the subject.
In this post he is offering copies of a paper he has recently given & those who have an interest may wish to contact him for a copy:
https://www.pistonheads.com/gassing/...=204&t=1708931
Thanks Mr Pointy. The first post in that thread will make interesting reading for those who regard them as wholly unenforceable.
I went through this 18 months ago when switching employers. My contract had a non compete clause. I paid for legal advice in the end as they are notoriously difficult, they can be enforced but only if certain guidelines are met. I can pm you the advice I received if you like, but it was specific to my contract.
Breadvan on Pistonheads is an expert and has written much good advice if you do a search, sort through the posts on PH though as there are a lot of armchair experts who don’t know what they’re talking about.
If you could, many thanks.
I really appreciate all the input lads, many PM's with valuable information.
My brother and two colleagues were victims of litigation when they left and set up another company in competition. I knew the chairman of the company suing them and I asked him why they were bothering. He said,
"Because we can afford it and they can't".
It eventually went nowhere but it did cost them a LOT of money.
Eddie
Whole chunks of my life come under the heading "it seemed like a good idea at the time".
Cheers Eddie, the company or your brother?
Both sides, in legal costs. It went to the High Court and you don't just have a solicitor there.
Eddie
Whole chunks of my life come under the heading "it seemed like a good idea at the time".
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