Non compete clause

J

johnmar

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Hi, I have worked with a company in a sales role for approx 10 years and have an offer to go with a much smaller company in same industry providing significantly more salary. I read through my original contract and I have a non-compete clause stating I can not work for another company competing with any services existing company offer for 12 months after leaving.

The non compete clause was stated in a fidelity agreement in addition to my original employee contract. However the copy I received was never signed by my employer. Although I would have signed a copy and returned to my employer.

Appreciate any advice on how to proceed here...the new job offer would have a massive positive impact on my earnings. (I have 4 children and am struggling with existing salary).

Many Thanks,
John.
 
The Irish Constitution "recognises and declares that people living in Ireland have certain fundamental personal rights. These rights are natural human rights and are confirmed and protected by the Constitution". It includes "

"The right to earn a livelihood

As a citizen, you have a right to work and to earn a living, whether you are male or female.

The State is under a duty to protect your right to work and earn a livelihood from unjust attack."

I worry that people, including employers, see mere employment contracts as trumping your Constitutional and Human Rights.

Do what you think is right. Take advice from a Constitutional lawyer if you see fit.

http://www.citizensinformation.ie/e...tution_1/constitution_fundamental_rights.html
 
Interesting reading here- though more from the point of view of why an employer should consider non-compete clauses:
https://employmentrightsireland.com/tag/non-compete-clause/

I think this one would come down to the finer points of whether it is an unreasonable restraint of trade or not, and the significance of the employee but not employer signing contract.

Given the stakes involved, I think professonal advice from solicitor specialising in employment law is imperative here before taking the plunge.
 
mathepac said:
The Irish Constitution "recognises and declares that people living in Ireland have certain fundamental personal rights. These rights are natural human rights and are confirmed and protected by the Constitution". It includes "

"The right to earn a livelihood

As a citizen, you have a right to work and to earn a living, whether you are male or female.

The State is under a duty to protect your right to work and earn a livelihood from unjust attack."

I worry that people, including employers, see mere employment contracts as trumping your Constitutional and Human Rights.

Do what you think is right. Take advice from a Constitutional lawyer if you see fit.

http://www.citizensinformation.ie/e...tution_1/constitution_fundamental_rights.html
Click to expand...
But a non compete clause does not say you cannot work or earn a living.

It simply says you may not work in a similar role in the same industry as your current position.

Quite a standard stipulation in certain industries and will be upheld in a court. - An example was just over 2 years ago, but I'm not mentioning names as it was settled on day the case was heard and the person in question spent 12 months twiddling their thumbs.

At the end of the day it depends on how you would affect your current employer and whether they would find it worthwhile to take legal action. In above case it involved contracts of multiple millions.
 
It's impossible to enforce as it's restraint of trade. You may have to accept a few months gardening leave and ring fencing of certain contracts but not for 12 months
 
As others have said, it's almost certainly unenforceable, as you can't just sign away your rights, certainly not without compensation (do they commit to paying full salary for 12 months after you leave?).

However, keep a few things in mind:

- it's always best to try and leave on as good terms as possible, especially in a small country
- try and avoid if possible any sort of legal action: for example, don't even mention the non-compete issue unless they do, and certainly not to say first off "I've spoken to my solicitor, and...."
- under no circumstances take or retain anything belonging to your current employer, in particular given your role, lists of customers. This doesn't mean to say you can't contact someone you already know or have a relationship with, just that you can't use information held a previous employer that's proprietary to them.
 
peemac said:
Quite a standard stipulation in certain industries and will be upheld in a court.
Click to expand...

That should read "can be upheld" rather than "will be upheld". It's very rarely the case it will be. It's upheld where your right to earn a living is balanced by a competing right, and generic non-competition doesn't do that: it would have to be something like the right to protect proprietary information. It's by no means certain it would be upheld, and most employers would run a mile from even attempting to, as it will almost certainly be very costly for them to do so. Presumably in the case you quote, the employer paid the ex-employee to remain idle for 12 months? That's the kind of price courts would place on signing away your rights to earn a living.
 
I doubt it really matters if it can be enforced or not. If you are going to be involved in a restrictive practice case or even worse have your future employer dragged into it, you can expect the offer of employment to be withdrawn or they will simply terminate you within the probation period. A small company does not want this kind of expense or hassle.
 
Thanks all for the replies...makes sense to get legal advise here. IMO it might be best to be upfront with existing co and ask them what they will do. I have also seen below which is interesting although would rather come to an agreement if possible versus legal route...

High Court grants injunction allowing employee to work for rival company
The recent granting of an interlocutory injunction by Laffoy J. in the High Court case of Octavio Hernandez v Vodafone Ireland Ltd, [2013] IEHC 70, raises questions over the use of non-compete clauses in contracts of employment. The plaintiff, a former employee of Vodafone Ireland Ltd, was successful in his application for an interlocutory injuction to restrain the company from interfering with his contractual relationship with competitor, Telefonica Ireland Ltd (O2).
At the crux of the issue was a non-compete clause in Mr Hernandez’ contract of employment with Vodafone Ireland Ltd which placed restrictions on his working for a competitor company within six months from the termination of employment. Laffoy J. noted that in relying on the non-compete clause in the contract of employment, Vodafone Ireland Ltd. had created a situation in which the plaintiff could not commence employment with O2 until 1 May 2013 and would lose in excess of 3 month’s salary. It was observed that the plaintiff was a married man with two children and that such a restriction would leave him without an income to meet his and his family’s needs. Vodafone’s position that it was merely enforcing its contractual rights was dismissed by the Judge as “utterly naïve”.
Laffoy J was satisfied that Mr Hernandez had established a fair issue to be tried and interestingly noted that the fact that Mr Hernandez was fully aware of the non-compete clause in the contract of employment would be “immaterial” in determining whether the clause is enforceable. The Judge accepted the plaintiff’s argument that it was of the utmost importance that he had a continuing income stream to support him and his family and therefore was satisfied that damages were not an adequate remedy. Finally, Laffoy J found that the balance of convenience lay in granting the injunction due to the situation Vodafone Ireland Ltd had created for Mr Hernandez which was distressful to him and his family. The plaintiff was therefore found to have satisfied the criteria for the granting of an injunction.
The substantive issue of whether the non-compete clause of the contract is enforceable has yet to be tried. However, the granting of the interlocutory injunction in support of Mr Hernandez’ application indicates that an employer’s ability to rely on a non-compete clause in a contract of employment may be significantly undermined. As a commonly used contractual clause, aimed to prevent the transfer of skills, knowledge and property to competitor companies, this may be of particular concern to employers who rely on such contractual provisions in the protection of intellectual property.
 
Reading between the lines it would suggest that if an employer is serious about a non compete clause then they need to be ready to pay for a period of 'gardening leave'.
 
The more senior you are in a role, the longer the notice period and non compete. But a 12 month non compete is totally unenforceable. It is too long a period for any judge to take it seriously. I would expect that you cannot contact any of your existing clients for a 12 month period but not working in the same industry for that period will not be enforced.

And take newtothis's advice on your exit strategy. Leave on as good terms as possible. Don't attempt to poach clients or anything like that.

If you are in a sales role, there is a good chance they will put you on gardening leave for your notice period anyway.


Steven
www.bluewaterfp.ie
 
johnmar said:
Thanks all for the replies...makes sense to get legal advise here. IMO it might be best to be upfront with existing co and ask them what they will do. I have also seen below which is interesting although would rather come to an agreement if possible versus legal route...
Click to expand...

No harm in getting legal advice, though my own (and presumably others') comments were based on legal advice I received in the not too distant past. I'd be careful about how you raise it with your employer: asking what they'll do and saying you've spoken to a solicitor might put them in a confrontational frame of mind. I'd be very open what you're planning on doing (leaving to join company X to work as their whatever), and see what they say. There's a good chance they'll say "good luck" or whatever and discuss details of leaving (any employer with an ounce of sense will do that). It's only if they mention the non-complete clause you need to discuss that specifically. Again, if that happens, try and resolve amicably rather than getting solicitors involved.

P.S. I have to say, I love the quote you had from that case: "Vodafone’s position that it was merely enforcing its contractual rights was dismissed by the Judge as “utterly naïve”."
 
What happens if your current employer contacts your perspective employer and threatens them with legal action if you, in your new role, go after their customers?
 
Purple said:
What happens if your current employer contacts your perspective employer and threatens them with legal action if you, in your new role, go after their customers?
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I suspect the prospective (I assume you meant that, rather than perspective?) employer would have a good laugh. On what basis would any such action be taken, given there's no contractural relationship between them?
 
newtothis said:
I suspect the prospective (I assume you meant that, rather than perspective?) employer would have a good laugh. On what basis would any such action be taken, given there's no contractural relationship between them?
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Yes, typo on my part, obviously.
A small company which is threatened by a larger one for conspiring with their employee to go after their customers would be rather stupid to "have a good laugh". If the smaller company knowingly employs a person on the basis that they will divulge confidential information they are putting themselves in a precarious legal position.

I have personal experience of a situation where someone left a company and after a break in employment went to work for a new employer. The new employer was threatened with legal action by the former employer on the basis that the new employee would be divulging confidential information. Thee legal advice to the new employer was unequivocally that they would lose in court.

The larger company could also let the smaller company know that they would be targeting the smaller company's customers if they poached their current employee. They could also target their key employees.
 
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