I’m going to start this one by reminding you all that I’m a
Recruitment Consultant, not a Lawyer. I
have no lawyerly qualifications and as with any kind of legalese, the only way you can be really sure that
you’re not going to be sued, is to consult someone who is qualified to give you
that sort of advice.
And even then, they generally won’t give you a definitive
answer. Because Lawyers never do.
However....as a Recruiter, I do get to observe employment contracts
all the time. In my humble opinion some
of the contracts businesses ask their employees to sign are not really worth
the paper they're written on. Whilst
many companies do take the contractual side of things very seriously, many
don’t! Well, they don’t until you want
to leave, and then they kick up a stink.
I should say that it’s not often that employees and
employers end up wrangling over contractual conditions. But recently, there have been a couple cases that
I thought worth sharing should you end up in this position. The main area of contractual dispute tends to
be "non-competes"; essentially these clauses are intended to stop an
employee heading off to a competitor taking key clients with them, sharing sensitive information or
poaching other employees.
I think it's fair to say that few people really read employment
contracts fully when offered a role.
Generally, the candidate is excited to have been offered a role and they
really only look to confirm salary, hours, holiday allowance and bonus
structure. I'd advise taking the time to review some of the small print and
challenge anything you're not happy with as this is much easier done up front.
Once you’ve signed something, you can’t really take it back.
When it comes to non-competes, the comment I hear most often
is "it wouldn’t stand up in a court of law". But to be honest very very few cases actually
end up in court, which makes the couple of examples I've seen recently of
companies threatening to enforce non-compete clauses seem quite ridiculous. Going to court to prevent an employee
potentially taking information, clients or other staff when they leave would
cost an employer a lot of money. Most of the time, it isn’t worth it, for all
but the most senior roles who'd have close relationships across a number of key
client accounts.
When an employee has decided to leave, chances are they're
going to be staying in the same industry and, likely as not, in the same
locality. So an Account Manager leaving
Agency X in Manchester for a promotion, better pay or just to work on different
clients is quite likely to end up at a direct competitor of Agency X also in
Manchester.
Recently this happened to a candidate of mine. When handing in her notice to the small
independent agency she was working at, her boss reminded her that only that week,
he had put a contract appendix on her desk which included new clauses saying
that she could not go to work for a competitor. He stated that therefore she
could not leave and if she did leave, he would take her to court. Bearing in mind that this was an Account
Manager earning £25k per year, yes she was the day-to-day contact with clients
but realistically her leaving wasn't a threat to her current agency. In this case her original contract (which she
had signed 2 years previously) made no mention of these non-compete clauses and
whatever her current boss had landed on her desk, had not been discussed, nor
signed. Therefore, I’m pretty sure that
would let him down ‘in a court of law’.
Secondly, the agency she was going to worked only in a very specific
sector. Her current agency had no
clients in this sector. So there was no
direct threat of her ‘stealing’ clients.
The ‘new appendix’ wording was also extremely broad along the lines of
‘you will not be able to work for any competitor business within a 30 mile
radius of Manchester’. Even had this
been part of the original contract, I understand this would be extremely
difficult to enforce as it's far too unspecific therefore preventing the
candidate from earning a living.
Essentially this boss was a bit of a bully, felt aggrieved
that someone wished to leave and wanted to make it as difficult as
possible. After 3 years solid and
efficient service this seems a shame rather than recognising that few staff
stay in one business for life these days.
In the end the candidate felt they needed to take legal advice and was
reassured that a) the new clauses wouldn't be considered part of their contract
and b) even if it had been, it was highly unlikely to have been enforceable or
to have got to the stage of her being sued.
When I did a bit of research into this, the application of
non-compete clauses come down to reasonableness in terms of an employer being
able to protect their legitimate interests in ensuring their business isn't
damaged by key staff taking commercially sensitive information or directly
soliciting specific clients and other staff to encourage them to move with them
a new employer. The clauses should not serve prevent staff leaving altogether
or even going to a company in the same sector or region where this can't be
shown to directly lead to loss of business to the original employer. Thus a
court would generally only consider enforcing non-competes for senior level employees
who have been instrumental in acquiring and directing client accounts. In this case, I can quite understand that they
may be able to influence clients and there could be multi-million pound
accounts at stake, so yes the non compete clauses do become much more
important.
The second example I came across was where the client asked
an employee to leave the business. Not
redundancy, just ‘mutual agreement’ (I want you to leave...). In this example, the candidate had two months
notice period and before she left, asked for confirmation that she would be
paid her 2 months salary, which the
client concurred. This is dicey ground,
had the candidate taken legal advice, I am pretty sure that this would be
classed as unfair or constructive dismissal and yes, in the films, you’d leave
with mega bucks. However, the candidate
hadn’t been terribly happy and was very shocked to have been faced with this on
what was a normal Monday morning and they thought, they’d rather just leave and
take the 2 months salary. The problems
came about when the client reminded the candidate that they had clauses in
their contract stating that they could not work for a competitor within a 20
mile radius for a period of 12 months.
When faced with the loss of your job, surely the natural reaction is to
find another job – in the same industry and city as that is what you do! The candidate felt that they’d been
effectively told to leave thus surely all bets were off. Not the case, these clauses can survive
termination of the overall employment contract for whatever reason. The candidate in this case has taken this
as a spur to set up on her own but is being extra careful to try and find completely
new clients as she is only to aware that if her old boss suspected she was even
speaking to previous contacts he'd almost certainly be issuing legal letters.
As with all legal stuff, there often isn’t a black and white
answer. Which is why I’m a Recruiter not
a Lawyer. But my advice is read your
contract before you sign it. Clarify
anything you are uncomfortable with.
This is the time to negotiate and if the employer wants you on board,
they’ll negotiate. Be wary of anything
that looks unreasonable – it probably is.
Get a lawyer to check it if you are really worried – it’s the only way
you can put your mind at rest. And also,
it is worth remembering that employers are super protective of their
businesses, they take it personally when you leave and often, they’re not
reasonable or nice about it. No matter how long you’ve given them loyal and
committed service.