Non Compete Clause Applies to....

[chirag2205]

Hi All,

I need some clarification on Non-Compete Clause.

Background

Client: ABC (ABC is an insurance and investment company. They do business in many countries, and their legal name may be like ABC UK Insurance, ABC Investment, ABC US, etc. But the parent company is ABC for all. )

Software Vendor: SV
Consulting Firm: CF
My Company: Myself

ABC UK Insurance gave the contract to SV to implement the product in their company. Due to lack of resource availability, SV contacted CF to see if they have any resources who can work on this project. CF is their implementation partner.

CF approached me and signed a contract with me to work on this project.

So CF supplied resources to SV, and SV introduced me to ABC Insurance. And I started working for ABC Insurance.

When I signed the contract with CF, in my contract there is a non competing clause "The Contractor shall not for a period of six months following the termination of the Assignment supply its services directly or through any other person, firm or employment business, to any client for which it has carried out assignments at any time during the previous six months".

Project details are
Candidate name: my name
Client: ABC
Contact at Client: xxx

I worked through this setup/contract for 12 months(3+6+3).
I finished this assignment in March.

Query :

A few days ago, ABC Investment reached out to me to determine whether they can contract with me directly as they are starting a project. I was recommended by SV(The same SV who had a contract with ABC UK Insurance) as it was a similar requirement that I implemented for ABC UK Insurance.

My question is ABC Investment and ABC UK Insurance and two separate legal entity. But the parent company is ABC.

Can I accept the contract offer from ABC Investment, as the management, people, technology/software used, etc are total separate then ABC UK Insurance? And If I do accept, can CF challenge me as in the contract they have mentioned Client as ABC.

[northernladuk]

Depends. The handcuff can only apply if the client you are contracted for is going to lose money on it. If they are in a position to supply the work then the handcuff will stand. It is designed for exactly that, for you to leapfrog them and they get left out of pocket.

If this new piece of work is completely separate and CF have no skin in the game then yes you can go ahead and do the work. They cannot pull a handcuff on you just to spite you or because they are hacked off. A judge won't like that at all if it went to court so pretty stupid thing to do.

Check if CF are involved in the work at all. If they are then yes you are pretty stuffed. If they are not then fill your boots.

[chirag2205]

Depends. The handcuff can only apply if the client you are contracted for is going to lose money on it. If they are in a position to supply the work then the handcuff will stand. It is designed for exactly that, for you to leapfrog them and they get left out of pocket.

If this new piece of work is completely separate and CF have no skin in the game then yes you can go ahead and do the work. They cannot pull a handcuff on you just to spite you or because they are hacked off. A judge won't like that at all if it went to court so pretty stupid thing to do.

Check if CF are involved in the work at all. If they are then yes you are pretty stuffed. If they are not then fill your boots.

As I said this new work is from another legal entity ABC Investment and not ABC Insurance. CF can provide resources to both but ABC Insurance is not interested in working with them whereas ABC Investment doesn't know who CF is.....

[northernladuk]

As I said this new work is from another legal entity ABC Investment and not ABC Insurance. CF can provide resources to both but ABC Insurance is not interested in working with them whereas ABC Investment doesn't know who CF is.....

Well this could be a grey area and I don't think there is a straight answer. CF could argue ABC are the same, they could also argue Insurance and Investment are closely related and say no, or they could just get the hump and pull it on you anyway and the only way you can get around it is to go legal.

All that said, you say CF provide resources but did they have the option to source for this role? It's possible CF only have a contract for certain types of roles in certain areas. The rest go through internal processes and CF don't get a look in. If that's the case you are fine. Bottom line is, if CF can't make money from this then you are fine. If there is a chance you are cutting off CF's revenue stream you've got a problem.

So... Check if CF has skin in this role. If not happy days. If they do, why not suggest that CF fills the role and you go through CF.

Fingers crossed if they've come to you direct then CF isn't involved. It's not normal for clients to do their own legwork while having suppliers doing it at the same time.

[chirag2205]

Well this could be a grey area and I don't think there is a straight answer. CF could argue ABC are the same, they could also argue Insurance and Investment are closely related and say no, or they could just get the hump and pull it on you anyway and the only way you can get around it is to go legal.

All that said, you say CF provide resources but did they have the option to source for this role? It's possible CF only have a contract for certain types of roles in certain areas. The rest go through internal processes and CF don't get a look in. If that's the case you are fine. Bottom line is, if CF can't make money from this then you are fine. If there is a chance you are cutting off CF's revenue stream you've got a problem.

So... Check if CF has skin in this role. If not happy days. If they do, why not suggest that CF fills the role and you go through CF.

Fingers crossed if they've come to you direct then CF isn't involved. It's not normal for clients to do their own legwork while having suppliers doing it at the same time.

Point no. 1: CF didn't provide resources directly to ABC Insurance. CF provided resources(me) to SV and SV provided resources to ABC Insurance. That project is over.

Point no. 2: CF can provide resources similar to my skill set to both ABC Insurance and ABC Investment.

Point no. 3: SV is providing software and support to both ABC Insurance and ABC Investment.

Point no. 4: Recently when ABC Investment decided to implement more products from the SV, they inquired do you know any resources who can implement it for us. SV knew I have finished with an old project hence they recommended ABC Investment to reach out to me. It was SV's decision to recommend me and not CF. ABC Investment reached out to me asking to collaborate with them for this project. ABC Investment doesn't even know who CF is and I guess same for CF they don't know anyone in ABC Investment.

[northernladuk]

. ABC Investment doesn't even know who CF is and I guess same for CF they don't know anyone in ABC Investment.

There you go then. Fill your boots.

[chirag2205]

There you go then. Fill your boots.

Thanks for your valuable inputs. Much appreciated.

I am just worried that CF can use the contract non compete clause stating that in the contract client name is ABC which means all like ABC Insurance and ABC Investments.

[eek]

Thanks for your valuable inputs. Much appreciated.

I am just worried that CF can use the contract non compete clause stating that in the contract client name is ABC which means all like ABC Insurance and ABC Investments.

They may try it on but firstly they need to discover you are there and then they need to send you a letter - only then would you have something that you need to worry about.