Employing someone who has a non competition agreement

[Oneeyedvic]

If someone has signed an agreement with an employer that they won't work for a competitor for 2 years after leaving their job, if they do elect to work for a competitor, who can be sued - is it just the individual or can the new employer?

[buildersmate]

Its with the individual, since that's who the agreement was with. The new employer would not even know about the agreement.
But some employers that compete have mutual non-disclosure agreements established between each other.

[Hymie]

I do not work in the legal profession, and would welcome comments on the following:-

Personally I don�t think these non competitive agreements are worth the paper they are written on.

Imagine Tesco�s made all their check out staff sign an anti-competitive agreement that they would not work for another supermarket for 2 years after leaving their employment.
Tesco�s could reasonably argue that they had invested time & money in training their staff to operate the check out systems.

Now if Tesco, or any other supermarket tried to enforce such a condition, I believe it would be laughed out of court. Otherwise any employer could place such a non-competitive agreement in all their employment contracts and effectively restrict their staff to working for them � or not be in gainful employment for 2 years.

These anti competitive agreements are just another example of the contempt with which employers in the UK, treat their staff.

Personally I would think twice about working for a company that wanted me to sign such an agreement � unless they were willing to pay me for the 2 years in which my employment was restricted.

Once Europe finds out about these practices, they will instruct the UK to ban them by law � legal right to work for whom you like.

[Oneeyedvic]

What I have been told by a friend in the legal profession is that they can not sue unless they can prove a loss of income. This may be a distinct possibility. I am just trying to figure out who they can sue though.

Thanks for advice - obviously any further advice is appreciated.

[Ethel]

Hymie - these contracts are never intended for check out staff at Tesco.

They are for professionals who could use their insider knowledge in the new posting to 'steal' developing techniques and procedures, or 'steal' a client base in a very small and specialised field. Companies all over the world use these contracts where appropriate. Many pay their staff full wages to be on 'garden leave' - that is, to stay at home and not work at all for a period of time.

Anyway, Vic - it is the employee that would be sued not the employer. Although the employer could be sued if he, for example, used the new employees prototype that he had developed for the first company - the company own it, not the developer.

[Hymie]

Obviously Tesco could reasonably prove loss of income; the employee is now helping sell goods for a competitor � which would likely to have been sold by Tesco, especially if there were only two supermarkets in the area.

Tesco would be able to back up their claim, showing the amount of goods sold by the employee � and ask for the value of good sold by the former employee on behalf of the competitor (case Won?).

[Oneeyedvic]

No, that is not loss of income. Loss of income would have to be proved by showing that customers went to a rival supermarket with the former employee.

As Ethel mentions, we are really not talking about cashiers at Tescos - it is for people who can make a potential difference to a company (and no cashier at Tescos can do that)

[Oneeyedvic]

Hi Ethel,

If the company could show a loss of earnings since the sale person had taken his customers with him, then the original employer could only sue the employee then?

[Ethel]

Vic - that is very muddy waters. The 'theft of prototype' for want of a better expression is the more usual example for suing the new employer - it involves copyright issues and is more straightforward.

The client list is different - it is clearly wrong for the employee to 'steal' the client list and there would be a potential for the new employer to be sued if it can be showed that the employee was hired simply for the client base.

However - the ex employer would be reluctant to prove this because it would mean contacting the ex-client, who clearly would not appreciate being approached in this manner. It is extremely poor customer relations.

Very murky waters indeed. If you like I will spend some time over the next couple of days finding relevant cases

[Oneeyedvic]

Thanks Ethel

[Hymie]

Dear Vic,

Since we are only talking about employees who can make a potential difference to a company � as CEO of Tesco, I�ve decided to sack all our check out staff.

I can�t work out why we employ them in the fist place � since they are not able to make a difference to the company.

Come and see our new look Tesco on Monday morning !!!!!!!

[kempie]

Hymie - please do as you have suggested.

If you are not covered by an agreement barring you from working as CEO to the other major supermarkets, please also continue your sterling initiative with Asda, Waitrose, Morrison, Sainsbury et al ;-)

[Twenty20]

Oneeyedvic - it would be the employee who could be sued, but it would have to be proven, which is quite difficult. The clauses are mostly used as a deterrent in my opinion.

Has the sales person moved directly to the competitor? If he has then it would be easier to prove. If there was a gap in between then it could prove more difficult.

My personal opinion is that a 2 year non competition clause is probably unenforceable as it is too long. 1 year would be more easily enforceable. A lot happens in 2 years in business and the client list would most probably be out of date.

Again, personally, if we had a salesperson leave to go to a direct competitor and they took their client list with them and we stated losing business as a result, we would almost certainly get a solicitor involved. I'm not sure how far we'd take it though. It would depend on how much business we'd lost as a result.

[Ethel]

I found this article which is of particular relevance, Vic.

http://www.personneltoday.com/articles/2000/04 /01/7083/staff-who-come-in-from-the-cold.html

especially:

It is not unlawful for a company to entice employees away from another company. But if the enticement encourages or facilitates the employees to breach their contracts, including post-termination restraints, the ex-employer could commence proceedings for inducing breach of contract - or, less commonly, for conspiracy - against the poaching company

I agree that the clause may be unenforceable but it can not be taken for granted. If this employee is senior in a highly specialised and narrow field, then it could be deemed to be reasonable.

[Oneeyedvic]

Cheers Ethel, useful as ever.