1

My contract says I cannot work for a competitor of my current employer upon termination of the contract and six months thereafter. There are no remedies mentioned in the contract.

I work in a small field of cyber-security and there are not many companies in this field in the UK. I never really paid attention to this section nor imagined it would be enforced but now coming to accept an offer from a competitor.

My role in the current company, they would argue, is substantial and I'm exposed to critical business decisions however I am not an executive and do not sit on the board.

Assuming I will go ahead and move to a competitor:

  1. What legal risks am I exposed to?
  2. What legal risks would my new employer would be exposed to (if any)?
  3. Am I required to notify the new employer on the issue?
  • 1
    You mention "not many companies in the UK", but does your contract actually specify a geographical limitation? Restraint of trade clauses should be narrow, and therefore leaving out a geographical limitation is inviting the courts to define one - it's not an automatic world-wide limitation. – MSalters Nov 13 '16 at 21:45
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Restraint of trade clauses are tricky. They are only enforceable if there is a legitimate interest which needs to be protected and only to the minimum extent needed to protect that interest. Therefore, you must have specific business knowledge (algorithms, code, customer information etc.), not general knowledge (stuff taught in schools or generally available) and preventing you working for a competitor is the only reasonable way of protecting it. If this is so then 6 months is not unreasonable.

Assuming that the clause is valid then for you to take a job with a competitor is a breach of contract and you would be subject to all the normal sanctions including an injunction to stop and damages.

Your new employer is not exposed as they are not a party to the contract, however, if you are forced to breach your new employment contract then they can sue you too.

In both cases the employer has to initiate action and it may not be worthwhile.

You can take the risk if you want but you should seek legal advice.

1

The answers above are good, but there are two aspects (perhaps to your advantage) that is worth emphasising.

If such a case ever went to a hearing, the remedies which could be claimed are injunction ("You cant work for those people") or damages ("You must pay us in compensation/remedy for the harm your action caused us"). Nothing else really. The answers above address whether or not an injunction could be obtained. But the other arm - damages - is very weak. They would have to show they have actually been harmed, and damages would be only the harm they could directly show, flowed in a predictable (foreseeable) manner from the breach of contract. That means they can't claim money as a general thing, or for unforeseeable harm - and as an individual the assumption is your resources are low and you couldn't compensate most times anyway.

Generally it is hard for an employer to claim a sizeable sum for such a matter in most cases - you joining Competitor PLC rather than say, Tesco, hasn't obviously cost them any extra loss or money. So all that's left is injunction really, unless you take specific clients or documents (which I assume you won't). And that has too be "reasonable",and reasonably limited, to not stop you moving with ease... which in a limited market plays to your favour too.

0

Unfortunately this is something you need to see a lawyer about as the devil will definitely be in the details - and indeed the matter is not clearly settled in the courts. (In fairness, courts - at least in many parts of the world, are loathe to enforce these kinds of agreements)

Some of the relevant issues include -

  • How reasonable and limited is the restraint of trade ?
  • Was there valuable consideration in exchange for the concession ? (including, but not limited to - are they paying you garden leave)
  • Was the bargaining position of each party fair ?
  • How informed was your decision to take on the restraint of trade clause ?
  • Does it unfairly disadvantage you - ie does it prevent you from earning a living ?
  • Do your actions provide unfair disadvantage to the other party ?

(Depending on your role, and reason for your employment), your new employer probably does not have any legal risk. You probably don't have a legal obligation to tell him - unless he solicited your services in order to take advantage of information you possess from the other company.

None of these questions can be answered without specifics, and if we have that level of specifics we probably won't answer it as we are not your lawyer!

  • Would it be considered that you are required not to divulge any trade secrets of the company anyway? So clearly if I joined a competitor, I might get into a situation where I could solve a problem by illegally using my knowledge of a trade secret, but I wouldn't do that because it is illegal. – gnasher729 Nov 14 '16 at 9:32

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