RS2 JIM

iTrader: (5)

Good Morning,

I'm looking for a little advice or to be pointed in the direction with regard to contracts of employment etc. Three of my colleagues and I are setting up our own company in direct competition with the one we currently work for. Our clients have suggested many times that we do this and finally we've bitten the bullet and gone for it. We're handing in our notice on the 25th of Jan and aim to have the company running by the 1st March. We're happy to work our month's notice but not overly sure we'll be welcome once our driector discovers what we're up to. However, i have a few worries regarding the contracts we've signed over 18 months ago. They state that we are not allowed to solicit any business whilst still under the employment of our current employer and for a period of six months after leaving employment too. Now, are these just 'scare tactics' to try to warn an ex employee off or are they actually legally binding?
Our job descriptions have remained the same for the duration of our employment despite the fact we're all given much more responsibility every month! Since the company 'centralised' our accounts system they've laid off all the accounts staff and expecte us to do their tasks for no increase in pay or change to our job description.

Can anyone offer any friendly advice on this matter. I'll probably end up going to see a lawyer anyway just to be sure there are no sneaky clauses i'm not seeing!

Cheers

James

Brendan Hughes

When I studied this 15 yrs ago it sounds like your ones would be legally binding, as you are setting up in direct competition with the same clients. Employers were allowed to restrict competition up to a certain level, yours sound quite reasonable. If they'd banned you for 5 years across the whole EU, for instance, that would be too wide and thus struck out.

Things have changed, others here are better than me!

Good luck anyway.

Oh BTW, not sure how you can get around that "solicit" trade clause. If you prove they asked you to do it and came to you without advertising etc, are you strictly within the terms of the clause? Tricky...

RS2 JIM

iTrader: (5)

Thanks for the response Brendan. I think we may be in a bit of a grey area. Our clients have said that they will back us totally as they have faith in us and we provide a very good service. However, i think we may have a way around the problem. The business is a service to the oil industry and the contracts my current employers have signed are all on the basis that they willbe able to provide the required service to the clients at all times. The problem ofor my employer is that myself and the three others are the only guys who can do the job. There's no-one else available or able to do it and therefore we expect the service levels to drop. Our clients have promised to enter numerous complaints about the lack of service and ensure that the contract come's our way. Ok so it's a little underhand but my current employers are taking the michael when it comes to invoicing etc and it's beginning to reflect badly upon ourselves!

Thanks

James

Dunk

iTrader: (1)

I'd edit your profile & remove your mail addy to be safe

D

Dave P

I would seek formal legal advice if I were you. You risk no income for 6 months.

Dave

eClaire

I'd contact the Department for Work and Pensions 020 7712 2171 (9.00am-5.00pm Monday-Friday), or The Small Business Service 0845 001 0032 (they might tell you to call the DWP or AKAS (sp?) but it is worth a shot)

pbee

I have had a similiar claus investigated when a term in a contract said I could not work for another employeer in the same industry for x years.

I was told it was not enforcable as It was the area of trade before I joined the comapny and would endure problems If I had to retrain to work in a completely different field.

Your problem is different as your are starting your own business whilst working for your current employer. And soliciting their current customers.

Personally I wouldnt say anything to anyone else at your workplace. and seek legal advice.

There are plenty of ways round this.

My old favourite is to sleep with your bosses wife / daughter, then tell him he will fire you then sue them for unlawful dismissal. Your contract is pretty much null and void then.

But seriously, you could make a family member the director of the company and you would all be employees that way you are in the normal leaving to go to another company situation

ProperCharlie

I am no expert, but I think that the contracts would be enforcable, and if i was in your employers position, i would damn well go to court to enforce them. some relevent factors:

presumably you only gained the contacts and therefore opportunities you now how through the employment of your current employer

you will be taking business away from him

it does not matter if the client prefers to trade with you, if they have a contract with the other company.

the other company will have greater resources than your new venture and will therefore be more likely to afford to get sh*t hot legal representation, and also seek injunctions to stop you trading whislt the breach of contract matter is brought to court. this could be long enough to make your project unviable.

just my £0.02

edited to add: my limited experience of this is under English law - may be different north of the border.

[Edited by ProperCharlie - 1/8/2004 3:18:02 PM]

Redkop

Try ringing Acas National Helpline - 08457 47 47 47.
They might be able to help you or vist their website
http://www.acas.co.uk/index.html

ProperCharlie

I'm not too sure if acas will be that interested. are the terms of employment intrinsically unfair? if not (and it doesn't sound like it) then the position is simply that someone wishes to knowingly contravene the terms of their employment for financial gain. it is up to the employer as to whether they consider it worth pursuing the matter. i imagine that they had the relevant clauses inserted into their employees' contracts precisely for the purpose of giving them redress in this situation.

MattN

""The problem ofor my employer is that myself and the three others are the only guys who can do the job. There's no-one else available or able to do it and therefore we expect the service levels to drop.""

2 points.

1. No one in world can do your jobs? Anyone can be replaced, never forget that.

2. If service does drop, that doesn't mean your contract is no longer valid (which is the original problem). In fact, in could be constrewed that you and your friends have have been sabotaging your current companies service levels so you can steal it's customer base when you leave.

eClaire

Oooooh. Redkop can spell ACAS. I can't!

ProperCharlie

sorry - didn't see your earlier post.



[Edited by ProperCharlie - 1/8/2004 6:50:46 PM]

eClaire

I'm on Coca cola, barbeque chicken, sweetcorn and chips

ProperCharlie

ahh - too late on the edit there.

salt & vinegar or tomato ketchup?

eClaire

See, I am useful for something!!!

Neither btw

Gooner

There is a European law which would not allow your current employer to stop you operating to earn a living. They will only have a case if they can PROVE that you have used material information to do so, ie, customer listings, price schedules, etc.
The information you hold in your memory is YOURS and cannot be denied you in earning a living.
Good luck with the business.
David

ProperCharlie

that's not going to be very hard if he ends up doing the same work for the same client. They can't stop you making a living but they can stop you nicking theirs.

good luck in any case.

Sheepsplitter

A few years ago there was a famous case of some footballer transferring to another club in the same area.
His contract said it was not allowed but he challenged it and moved anyway.
His lawyer dug out a lesser known EEC law of 'fair trade' that said it was illegal under European law to restrict the movement of employees and the case was thrown out of court.
Also I've worked in places where this has happened. The company always threatend to take action, but when it comes to the crunch their lawyers tell them it's impossible to enforce and they back down.
The other thing is you say your contact stops you approaching the customers, but it doesn't stop the customers approaching you, which is by the sound of it what has happened here.

It's a poker game really.
Good luck.

ProperCharlie

what happened to us was that the original company threatened to take out an injunction to prevent us from trading whilst the alledged breach of contract was taken to court. this would have taken about a year, and obviously no-one can survive without trading for a year. our people thought that they might be successful in getting this injunction against us. however, it was a more complicated case than the one outlined above, so this may not be applicable. i can say that it cost a sh*tload of money (in legal fees ) to sort out. in the end, it was comprimised before we got to court, so we never got to find out who was "right" in the eys of the law.

proceed with caution!!!

[Edited by ProperCharlie - 1/8/2004 9:20:04 PM]

Gooner

ProperCharlie, there has got to be proof that material information has been used, what is in your memory is yours. I went through this, and my ex employer tried to get an injunction, however, with no proof there was no injunction and the company I set up is heading for it's first million turnover this year.
BUT I DO AGREE WITH YOUR POINT - 'PROCEED WITH CAUTION', as only the smallest bit of material info can drop you in the POO!

ProperCharlie

yeah - and we had sh*tloads of it!

congrats on getting to the big M. We got to 6M after about 4 years, but things have leveled off a bit since then. Unfortunately, it's a very tight margin business, otherwise I'd be in the bahamas by now.

Diablo

Basically restrictive covenants are very hard for an empoloyer to enforce.

Unless the customer is contractually bound to your employer, there is nothing to stop the customer contacting you after you leave.

Employer A can prevent ex Employee B soliciting customer C

But

A cannot prevent customer C approaching ex employee C

Speak to a lawyer though, don't **** about with agencies or Scoobynet

D