You’ve found your perfect employee. They know everything there is to know about your industry and are well connected BUT they are currently working for the competition and have an employment contract which is full of non-compete clauses. Is there anything that can be done?
Employment Contracts with Non-Compete Clauses
Naturally, when businesses create employment contracts they put clauses in which stop the competition doing exactly what you want to do i.e. take a key employee and use all of their knowledge to gain competitive advantage. We’re hoping that your employment contract is full of non-compete clauses but there’s a reality that many of them are difficult to enforce.
We encourage employers to add these clauses so as to protect their business and to act as a deterrent to employees who want to act in an unethical manner after they have left employment. However, there needs to be a great deal at stake for businesses to go to the effort (and cost) of enforcing them.
What is and is not Enforceable in an Employment Contract?
This post has to be full of caveats as there is no way to be 100% certain how the law will interpret clauses. Add to this the fact that all contracts are worded slightly differently (and we won’t have reviewed them), you’ll see why we need to make you aware that if you find yourself in a situation where you want to employ someone who is currently working for the competition you need to seek guidance.
However, in general terms:
- Clauses which prevent an individual from earning a living are not enforceable. Many contracts contain clauses preventing employees working for the competition or setting up a business which competes with that of the employer. It is extremely difficult to enforce these clauses, for example, if you employ a lawyer then they have to be able to go to work for another law firm.
- Clauses which prevent stealing of clients or staff can be enforceable. Many contracts contain clauses which prevent ex-employees from approaching your staff or clients to offer them employment or services with their new employer. These can be enforced. The previous employer will need to go through the process of seeking an injunction against the employee which is extremely costly. However, it will depend how much is at stake and how deep their pockets are as to whether or not this is an action they take.
If you are looking to just employ someone who works for the competition but you will not require them to seek work from clients, solicit employees or use confidential information in anyway then you, and they, should be on fairly safe ground.
What are the Work-Arounds?
Our clients often asked about work arounds i.e. what if the employee who faces the restrictions doesn’t approach the client but a different employee does?
We will have to avoid giving generic guidance on this particular issue as it will depend heavily on the wording of agreements as to whether this is an alternative. Some of the factors that will impact on what can be acheived is whether or not there are confidentiality clauses in the contract as well as non-compete clauses.
If this is something that your business is facing, then give us a call on 0203 319 1649 or use the contact form, and we can look at the agreement and give you some insight into what the options are in your particular case.