Anti compete clauses in contracts

[Mercenary Keyboard Warrior]

I don’t really disagree with what you’re saying, however if the consultancy took it to court I think you’d struggle to win with that argument.

Ultimately, the consultancy’s business would be harmed, via an appointment which had been set up via the consultancy in the first place.

I see it from both sides to a degree, but ultimately at the time - with the situation I referred to, a lawyer told me I’d lose and not to contest it.

Ive seen one of these before. I think I may have left before it was resolved because I cannot remember the outcome (it was over 20 years ago )

I believe the company I was working for were arguing the clause was unfair since the (now employee) had applied based on seeing a vacancy advertised on the intra/inter net. Not because they were approached because they were there.
The consultancy was saying, our employment contracts say they cannot go to work for a client that they have visited the promises of with x months.

IMO consultancies would be better off applying the same T&Cs as agencies, in the B2B contract. If you employ one of our people within x months of them being on one of your premises we will charge you x% of salary. Eg could be 150% for a consultancy role and still be reasonable IMO.
If the company is willing to do so then clearly the person is valuable to them and they would have recruited that person anyway.

 

[aspiring]

Yes, the only person who can stop you from actually working for a competitor if there is a restrictive covenant in your contract is a judge in a court.

In reality a judge is only going to rule in favour of your previous employer if they can prove that they’re being damaged due to you working for that competitor.

Judges normally take a dim view of non compete clauses, because we live in a free competitive market, so they’re only going to swing the hammer if they really need too.

The only time a non-compete buggered me up, was when the hiring company didn’t want the aggravation, they were worried about the potential exposure.

They decided to withdraw the offer because they thought the non-compete was potentially enforceable (and it was a rare set of circumstances where it probably could have been).

Spoiler: Situation

I was working for a consulting company, and the company where I was temporarily assigned to wanted to “poach” me as a perm for themselves, and I really wanted it.

However, in reality if a client can freely poach employees from the consulting firm, the consulting firm just becomes a buffet from which people can steal whoever they want, which isn’t really fair on the consultancy.

In that case the “thou shalt not engage with, or be employed with any restricted customer” part of the contract was applicable, and fair…. (Even tho though it annoyed the hell out of me)

Is situation this not non-solicit as opppsed to non compete?

 

[Felon]

IMO consultancies would be better off applying the same T&Cs as agencies, in the B2B contract. If you employ one of our people within x months of them being on one of your premises we will charge you x% of salary. Eg could be 150% for a consultancy role and still be reasonable IMO.

That was suggested in my case, in fact the company who wanted to steal me, offered to “buy me out” of the non-compete.

However the consultancy firm were proper stubborn about it (they were known for it) and said “we’ll 100% go to court over this” at which point everyone backed down, I left and went my own way….

Is situation this not non-solicit as opppsed to non compete?

I believe it was a cross between the two, I’m not 100% sure if I’m honest.

It was 10 years ago so I don’t remember any of the wording, I think they mostly all fall into the same category though.

The wording of the contract can say whatever it likes, but it’ll never really mean anything unless it ends up in a courtroom, which is annoying because it normally means you’ll back down before that point…

A lot of these clauses are written a certain way in legalese, and are often open to interpretation- which requires arguments, judges and lawyers to decide….

 

[aspiring]

That was suggested in my case, in fact the company who wanted to steal me, offered to “buy me out” of the non-compete.

However the consultancy firm were proper stubborn about it (they were known for it) and said “we’ll 100% go to court over this” at which point everyone backed down, I left and went my own way….



I believe it was a cross between the two, I’m not 100% sure if I’m honest.

It was 10 years ago so I don’t remember any of the wording, I think they mostly all fall into the same category though.

The wording of the contract can say whatever it likes, but it’ll never really mean anything unless it ends up in a courtroom, which is annoying because it normally means you’ll back down before that point…

A lot of these clauses are written a certain way in legalese, and are often open to interpretation- which requires arguments, judges and lawyers to decide….

I was told by a consultancy previously that their client agreements would have some form of 6 month ban on hiring employees from that consultancy. However, the contract for the employee from the consultancy would not mention this.

Bit sneaky tbh as it still means your out of work for 6 months as the client base for this consultancy was so large

 

[Felon]

I was told by a consultancy previously that their client agreements would have some form of 6 month ban on hiring employees from that consultancy. However, the contract for the employee from the consultancy would not mention this.

Yeah the client had this agreement too, but ultimately no company can tell a customer off, so those things tend to only ever be used as a last resort….

The whole thing was a massive pain in the ass tbh, I wish they’d outlaw the damn things tbh, but I don’t think they will…

 

[dowie]

Are anticompete clauses enforceable.

For example you are not allowed to work for 6 months at a competitor after leaving a company. That makes it 3 months notice + 6 months out of work. It is crazy that you are not reimbursed for those 6 months.

They can be, things to consider though are your role/seniority, the geographical area in which it applies the extent to which it applies re: competitors; like a large tech company trying to claim that any tech firm is a competitor is reaching a bit etc.

Simply states must not work for competitior for 6 months post termination.

Are you sure it doesn't state a bit more than that? Like how badly written is this contract? Surely it would give a bit more details re: who is considered a competitor and are you sure there isn't a geographical element too?

Almost certain that would be treated as an unfair contract condition and would not stand up to scrutiny as would restrict your right to work which they cannot do.

No, it depends on the conditions, these clauses can be enforced so it's worth getting any given one you're presented with in the future checked over by a solicitor too.

I think your current employer would have to be able to prove losses as a result of you working for a competitor. In reality that's probably a very hard thing to prove

Sort of but not necessarily, that's going to overlap directly in the case of a salesperson taking clients for example but enforcing this stuff is more about whether it is reasonable and whether it protects a legit business interest, they don't need to necessarily add further steps faffing about proving possible future losses in the case that someone has knowledge of confidential IP AFAIK. that would be a legit business interest to protect anyway and the former employee saying "pinky promise I'm not going to be using it and will work on something else at competitor X" might not fly in court.

 

[dowie]

I was told by a consultancy previously that their client agreements would have some form of 6 month ban on hiring employees from that consultancy. However, the contract for the employee from the consultancy would not mention this.

Bit sneaky tbh as it still means your out of work for 6 months as the client base for this consultancy was so large

That's common enough and way more easily enforceable than the employee stuff, just have clients sign an anti-poaching agreement. Someone I worked with got caught out by one of these *after* moving to another country even!

 

[mid_gen]

I think most of my previous contracts have had non-compete clauses. I haven't really had the motivation to get them struck off before signing. I've moved to direct competitors several times. In reality, if they tried to kick off about it, they would get ****listed in the industry pretty fast.

Sales roles, and stuff with very sensitive IP, then it would be more of an issue.

 

[booyaka]

Lots of information in the thread - but as other have said - They are enforceable under certain conditions.

Been there, seen them, had them, threatened with them. Ultimately nothing came of them after a few months.

I do know someone who ended up in high court over it all, but he was ultimately the only sales guy the company had, had all the contacts, all the sales etc - He left, setup on his own (new company, i.e not a "competitor as it didn't exist previously which was his defense along with other legal wrangles) - Cost him a lot of money in legal fees, but he's made it back x50 over now working for himself.

 

[m4rmite]

Citizens advice bureau take on it

If your employer says you can't work for a competitor

Find out what you can do if your employer tries to stop you starting a new job, and check if you’re affected by restrictions in your contract.

www.citizensadvice.org.uk

 

[HangTime]

I was told by a consultancy previously that their client agreements would have some form of 6 month ban on hiring employees from that consultancy. However, the contract for the employee from the consultancy would not mention this.

Bit sneaky tbh as it still means your out of work for 6 months as the client base for this consultancy was so large

This is expected though to avoid companies just hiring the consultants they like for cheaper than the rate they pay the consultancy. I looked into it once because I had a consultant that had been working onsite with us for about 8 years or something and was keen to become an employee. Basically the steer I got from our legal was that there were ways round it if the consultant resigned their post and then applied for an advertised job. They had to leave the consultancy before applying to the job and the job had to be a genuine open posting that anyone could apply to. So essentially they would not be deemed to have been "poached" given there was a break between them leaving the consultancy and joining the client.

 

[dlockers]

This is expected though to avoid companies just hiring the consultants they like for cheaper than the rate they pay the consultancy. I looked into it once because I had a consultant that had been working onsite with us for about 8 years or something and was keen to become an employee. Basically the steer I got from our legal was that there were ways round it if the consultant resigned their post and then applied for an advertised job. They had to leave the consultancy before applying to the job and the job had to be a genuine open posting that anyone could apply to. So essentially they would not be deemed to have been "poached" given there was a break between them leaving the consultancy and joining the client.

That is a bit OTT on both firms tbh. Consultancies thrive on demand from ex-consultants. Blocking someone from joining industry from consultancy helps neither party...

 

[dowie]

That is a bit OTT on both firms tbh. Consultancies thrive on demand from ex-consultants. Blocking someone from joining industry from consultancy helps neither party...

That varies a bit depending on the consultancy.

Consultancy as an arm of a vendor (certainly in financial software) would generally be strict about it and maybe at best require people to have done their time before being given permission to go to a client or have the client buy them out (same applies to other employees within the vendor too).

Consultancy in terms of a place where they take on whole projects and send teams of employees over, sure they may well be open to it. Brian came from blah consultancy and Brian is super sharp and a great worker and he's suggested getting in touch with blah to handle project Tortoise/[insert dumb project name] for us. That does make sense.

Other consultancies less so, if they're more geared towards (or at least part of their business is) sending individual consultants (especially as contractors) then they'd likely be anti-poaching, they want their cut of the daily rate and their value add is that they have a large roster of clients if you contract via them.

That last case isn't too different to a recruitment firm that hires contractors after all contractors are often subcontracted by the recruitment firm themselves (whether going via an umbrealla or own ltd co) the recruiters are not going to be too impressed if they've hired Brian on £700 a day and (unknown to Brian) are charging the client £1200 a day and then the client tries to keep Brian on for another 6 months by cutting the recruitment firm out of the loop.

 

[aspiring]

This is expected though to avoid companies just hiring the consultants they like for cheaper than the rate they pay the consultancy. I looked into it once because I had a consultant that had been working onsite with us for about 8 years or something and was keen to become an employee. Basically the steer I got from our legal was that there were ways round it if the consultant resigned their post and then applied for an advertised job. They had to leave the consultancy before applying to the job and the job had to be a genuine open posting that anyone could apply to. So essentially they would not be deemed to have been "poached" given there was a break between them leaving the consultancy and joining the client.

What if the consultancy is providing services to 90% of companies within that sector. If I left I would be struggling in a way?

 

[hurfdurf]

Good points but if this was the case why would anti compete clauses exist in first place

Back when I worked briefly in a normal industry it was so you couldn’t take clients and contracts with you, demonstrable damage. If you stack shelves in Tesco you can do so in Asda.

 

[jaybee]

They are enforceable but need to mainly be reasonable
The first simplest consideration is does it make you unemployable.

A good example is a hairdresser, if you had a clause that said you cannot be hairdresser for 6 months post employment it will almost certainly be considered unfair and hence unenforceable.
If that said cannot be employed as a hairdresser within 3 miles of the place you worked that would likely be deemed reasonable and hence enforceable.

Its harder with more specialist roles since the obvious place you would go to is a competitor. In that case highly likely to be unenforceable and better to retain your staff.

I know a hairdresser that literally has this in her contract. 6 months and an X mile radius. I personally wouldn't pay any attention to it. We are talking as young as 16 year old girls trying to make a living. They're hardly going to go to the expense of taking one to court because she moved next door to work there. If they stole clients that's different...but even that can be hard to prove. It's fairly easy to pass on details of where you are moving to, to clients, without doing it in a way where you would get caught. i.e. Find them on social media, send PM etc.

 

[HangTime]

What if the consultancy is providing services to 90% of companies within that sector. If I left I would be struggling in a way?

I think it would depend whether you were personally involved with those companies. e.g. suppose you are working for a consultancy that provides services to companies A, B and C. You've done work on behalf of companies A and B during your time at the consultancy. I don't see that joining C should be an issue because you were not introduced to company C by your employer, they are not poaching you because you've never done work for them before.

 

[dowie]

I know a hairdresser that literally has this in her contract. 6 months and an X mile radius. I personally wouldn't pay any attention to it. We are talking as young as 16 year old girls trying to make a living. They're hardly going to go to the expense of taking one to court because she moved next door to work there. If they stole clients that's different...but even that can be hard to prove. It's fairly easy to pass on details of where you are moving to, to clients, without doing it in a way where you would get caught. i.e. Find them on social media, send PM etc.

Hairdresser examples are the textbook example of this sort of clause, presumably as they're quite simple to follow.

People do go to court over this stuff, hairdressers will have regular customers and if they're an employee of some hair salon and they move to another in the same town or very nearby then it's quite likely going to result in a loss of business as a bunch of customers will follow them.

The clauses aren't supposed to exist to be vindictive or to keep employees captive though so they need to be reasonable and thus have a limited duration and a geographical element. If the hairdresser gets a job in a nearby city 30 mins away then that way less of an issue and the notion that a hairdresser can never work in some town again is also unreasonable.

It gets a bit iffier with tech, at one company I had one that was 6 months and worldwide (a solicitor gave an opinion that it wasn't enforcible as it was too broad in scope), and another was EU-wide (back when we were in) and 3 months (in addition to the notice period) and that was deemed by a solicitor to have a good chance of standing up in court or at least good enough that I should be wary of breaching it.

With trading firms you can see far stricter ones going into 1 or two years and applying globally.

 

[Ev0]

I had all sorts in both my contract and then my refinance settlement agreement.

Frankly they could go f themselves over it if a competitor of theirs had offered me a role after making me redundant

 

[SPG]

Impossible to enforce.

Had this pulled on me once early in my career, Got a stinking letter through the post about from the previous company along with a solicitor, Took it to my new boss and after a week I had a new contract to sign as senior design engineer and not design engineer. This is then classed a progression apparently and perfectly acceptable as its not the same roll. (Git never gave me a pay rise though)