Unable to work within 50 miles radius?

[libster]

For 15 years I have worked for myself and recently had to find work due to profit losses yet still functioned. I figured I'd find work doing what I know best, fortunately I have found work with a local company on a self employed basis. The idea of returning to the work place and not having to have sleepless nights about money interested me, however with the money I have been earning doesn't meet the all my household bills so I have to leave.
Upon leaving I'm faced with a contract I signed on induction stating I would not work for a company with similar services for a 50 mile radius? yet I live 2 miles away, does that mean I cannot conduct my own work? and can they really enforce me to completely change my trade?
Also I noticed the date on the contract is wrong, would that help me?

 

[kulture]

It's called restraint of trade. Whilst possible it can be enforced the details matter. What exactly does the contract say, and what do you mean when you say working for them on a self employed basis?

It is possible that the self employed bit will limit or kill the restraint bit. After all the restraint of trade implies exclusive use of your services and self employed implies the opposite.

 

[libster]

I was employed as a 'business development manager' but on a self employed status. Essentially the products and services I sold are identical to what I did myself prior to working for this company. It was the mere fact I was struggling and I had lost a lot of my own self confidence which I have back now that I sought work.
I think I am looking to go back to what I did previously or work for another company with the correct salary, I will not contact nor try to bring across existing customers, but essentially we would be selling on the same patch, what happens if they have had contact with joe bloggs and then I ring joe bloggs? is joe bloggs deemed as a customer?

 

[Scott@KarmaContent]

Lots of solicitors do free evening legal advice clinics, pop down to one of those.

 

[TurricanII]

Being self employed but working for one company and having induction/restriction rings alarm bells that you might fall foul of IR35...
http://www.hmrc.gov.uk/leaflets/guide_limitcomp.htm

 

[tony84]

I dont know where I came across this story or how true it is but there was a solicitor who was told he could not work within a 20 mile radius of his previous employment. It went to court and the court sided with the individual. The reason being was that it was in a district of the city that had a lot of solicitors, they basically said the firm would not lose business as people would have a lot of options.

There was another person who (from memory) worked fitting cables under the sea, his contract said he could not work for another firm in europe or the northern hemisphere (or something alone those lines). He lost his case. He lost on the basis that there are only a handful of companies offering that service and the likelihood of him taking clients was much stronger.

That probably doesnt answer your question, but it does show it can be enforced and it can be overcome - its all down to the detail.

 

[Spongebob]

This company engaged your services on a self employed basis, yet they are trying to hold you to a standard employee contract.

It won't wash. Self employed means self employed. You are a hired gun, free to work for whomever you please. To hold you to this contract they would have to demonstrate that you were actually an employee, which they will not want to do.

I'm pretty sure I'm right, but you might want to check it out with a solicitor.

 

[Free Lance]

Key Question: what is the period of restriction? If it's more than 6 months then that is very unlikely to be enforced. Even shorter periods may be unenforceable.

 

[nelioneil]

Being self employed but working for one company and having induction/restriction rings alarm bells that you might fall foul of IR35...
http://www.hmrc.gov.uk/leaflets/guide_limitcomp.htm

I believe IR35 only applies for personal service limited companies, not ordinary self employed folk.

But the question of employment status is valid.

 

[UK Contractor Accountant]

You can't enforce a restraint of trade cluase when the engagement is that of contract for service (self - employment).

 

[paulears]

IR35 seems to now be swung towards the service companies, who seem to bridge the self-employed to employed gulf. Where people used to view the test questions as 'IR35' components, they seem to now be split off.

IR35 seems to be for when you ARE an employee, even when you think you're self-employed. There is a rather handy test calculator here
http://www.crunch.co.uk/ir35-calculator/
IR35 was designed to prevent contractors who do not meet the Inland Revenue's definition of 'self employment' being considered as independent.

 

[TurricanII]

HMRC are capable of changing the law and backdating the law. They did this and issued bills to many contractors. If you or your employer is avoiding tax or NI by not being an employee when you should then you could be in the firing line next.

 

[Newchodge]

You haven't given enough information to get a proper answer.

Someone needs to look at your 'employment' documentation so I would recommend trying to find an employment lawyer who gives an initial free consultation.

 

[libster]

Great responses everyone and I thank you all thus far because this has caused massive stress to me and my family as getting answers has really been a struggle. I have tried legal team within my house insurance but they wont touch it because I'm self employed, Acas wont either, I have phoned business link and then forwarded conveniently to a law solicitor.

Ill also note that my self employment was based on the fact I was out conducting B2B meetings using my own car and fuel doing over 400 miles a week, hence I had to leave.

1) Whilst working for this company I still have my own business interests which is 2 miles away, though minimal.
2) I was with this company for 1 day short of 2 months.
3) The term is which this lasts is 12 months upon termination of employment.

"Following termination of employment for any reason, you will not work for another company or engage in any business whatsoever that operates within the same business sector, or provides the same or similar business services as the company within a radius of 50 miles of the companies physical location at time of operation...." Do you need more?

Another company want to employ me on PAYE basis and 13 miles away, I just want to move on with minimal fuss.

 

[libster]

I'm not a limited company either, standard sole trader though if I was to stay longer they wanted me to go limited??? how that changes things I don't know.

 

[Scalloway]

If you are self employed and HMRC decide you are really an employee the employer is liable for tax and NI that should have been deducted. If you use a limited company and HMRC decide you are really an employee your company is liable for tax and NI that should have been deducted.

 

[libster]

After 2 months of invoicing it wouldn't make them an employer, would it? To be fair its not the taxation issue that is concerning me right now, its whether I can work within my trade that I have had for 15 years or whether I have to completely change / close my business.

 

[Newchodge]

As I said before, without reading the contract it is impossible to say. Generally you should not have a restrictive covenant for a self employed person. Also, generally a 12 month exclusion on work of any kind with any client on similar services would be unlikely to be enforceable as it is a restraint of trade rather than an attempt to protect a business's clients.

What did the employment lawyer say?

The key phrase that you have quoted states 'following termination of employment' if you weren't employed, then it doesn't apply. BUT the rest of the contract may indicate that you were actually employed.

 

[kulture]

I would be tempted to ignore that restraint clause. It looks on the face of it to be unenforceable. If they did try to enforce it you will have the employed/self employed argument to pitch at them. The last thing they will want is HMRC looking closely at their employment practices. Also work out what they paid you vs what it cost you. If you ended up being paid less than the min wage, then that is another potential stick to beat them.

 

[RichardParsons]

Hi Libster

You can get free employment law advice by calling Acas. If you visit their website then they advertise the telephone number. It might be a quicker/cheaper option than going to see a Solicitor.

Richard Parsons
courtinfo.co.uk