Restrictive covenant - Employment

Discussion in 'General Business Forum' started by PaulJones, Oct 11, 2019.

  1. PaulJones

    PaulJones UKBF Newcomer Free Member

    8 0
    I have been employed as an estate agent in the same office in a village for the last 20 years.

    The owner is going to franchise the business.

    20 years ago I signed a restrictive covenant that for one year after the termination of my employment I cannot act as a principle/director/partner of a company involved with Estate agency services.

    I have a good local presence and want to set up on my own in the same village. The director that signed the covenant 20 years ago has now left the company.

    Is this enforceable after such a long time. Can they stop me earning a living? Also if he franchises the business will this apply as the company would be operating under a different ownership.

    Help needed

    Thanks
     
    Posted: Oct 11, 2019 By: PaulJones Member since: Aug 22, 2016
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

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    By the sound of it that won't stop you working at an estate agents. Just not setting up a competing business for 12 months.
    Its the company you signed it with. Not the director.

    Perhaps have a word with the current director and see what can be done?
     
    Posted: Oct 11, 2019 By: Mr D Member since: Feb 12, 2017
    #2
  3. PaulJones

    PaulJones UKBF Newcomer Free Member

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    I want to set up my own business in the same village and yes I would be competing..
     
    Posted: Oct 11, 2019 By: PaulJones Member since: Aug 22, 2016
    #3
  4. PaulJones

    PaulJones UKBF Newcomer Free Member

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    and they don't know that i know the business is about to be franchised.
     
    Posted: Oct 11, 2019 By: PaulJones Member since: Aug 22, 2016
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

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    Question then becomes will the company bosses take legal action against you?
     
    Posted: Oct 11, 2019 By: Mr D Member since: Feb 12, 2017
    #5
  6. PaulJones

    PaulJones UKBF Newcomer Free Member

    8 0
    The covenant goes on to say I can't sell to:

    "Anyone, whether an individual, Firm or Company who is a client of ********* at the date of termination of employment, and with whom the employer has had dealings".

    Being the manager of the office with a good local presence for such a long time means I have dealt with a very large % of the village.

    I'm just trying to find out if this is enforceable after such a long time and given my current situation. Or would it only be for a court to decide?
     
    Posted: Oct 11, 2019 By: PaulJones Member since: Aug 22, 2016
    #6
  7. tony84

    tony84 UKBF Big Shot Free Member

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    Could you not be a 100% shareholder but not a director?

    Put your job title as estate agent?
     
    Posted: Oct 11, 2019 By: tony84 Member since: Apr 14, 2008
    #7
  8. tony84

    tony84 UKBF Big Shot Free Member

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    There are similar rules in contracts in our industry and we are always told they are unenforceable. Even if they were enforceable, there is no consequences of you doing it from what you have said. But maybe get some legal advice.
     
    Posted: Oct 11, 2019 By: tony84 Member since: Apr 14, 2008
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

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    Its for the employer or the court to decide.
    No court needed if employer isn't going to enforce it.

    Timewise you agreed with it once and disagree with it now. So probably not worth getting into timewise.
     
    Posted: Oct 11, 2019 By: Mr D Member since: Feb 12, 2017
    #9
  10. Mark T Jones

    Mark T Jones UKBF Big Shot Full Member

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    I’ve seen these covalent Enforced through the courts - though 12 months does seem to be an excessive term (6 months is usual)

    you are clutching at straws with your get-outs. However key questions might be

    will anybody remember the clause?
    Will they still have a copy of the contract?
    Is that specific legal entity still active (or does the wording of the contract cover the current legal entity)?
    And, above all, will they actual bother to enforce it

    if course, if they were to get rid of you it would be a different matter.
     
    Posted: Oct 12, 2019 By: Mark T Jones Member since: Nov 4, 2015
    #10
  11. Socio South West

    Socio South West UKBF Enthusiast Free Member

    870 214
    This type of clause is hard to enforce, and somewhere on the Legal forum will be a solicitor who has defended the restriction successfully.

    Reading the wording, set the company up with your Significant Other or a trusted relative as the director for the first 12 months which nullifies the clause as written, and allows you to be 'the business' until such time as you can become a director.

    Obviously it's hard enough starting on your own but if you keep your nose clean in terms of pinching existing clients and leads from your employer they have even less cause to moan.

    Further, IF the franchise does come to be, the franchises in the Estate Agency are usually to companies with a licence to trade under the Franchisor's banner.... so effectively the Franchisor is ceasing to trade in that area which strengthens your position.
    And if you are made redundant when the business is franchised, you can of course negotiate your position.

    Plenty of loopholes in this for you to get through!
     
    Posted: Oct 12, 2019 By: Socio South West Member since: Mar 24, 2013
    #11
  12. The Byre

    The Byre UKBF Ace Free Member

    8,978 3,507
    A very great deal will depend on the status of the employer after the franchise agreement has been signed, sealed and delivered. The OP may find that he is no longer being employed by the same entity, but by another, that may seek to free themselves of their duties under TUPE law.

    The best tactic here is 'Wait and see!' and keep all stocks of powder dry.

    My first port of call would be to contact this guy http://employmentlawclinic.com/ once I am certain of the status of the new company.
     
    Posted: Oct 12, 2019 By: The Byre Member since: Aug 13, 2013
    #12
  13. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    10,637 2,151
    Byre gives good advice, but a precautionary look at the contract may show if the exclusion is to vague to be enforceable or not, the cases that are won and made public seem to indicate the exclusion must be reasonable and not stop you carrying on your trade

    I have used Karl Limpert in the past and found his advice first class and his prices very reasonable
     
    Posted: Oct 12, 2019 By: Chris Ashdown Member since: Dec 7, 2003
    #13