Non-Solicitation Issue
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    Default Non-Solicitation Issue

    Hi all,

    New to these forums.

    I've done a fair bit of searching online and through the CUK forums however the issue surrounding non-solicitation clauses tends to differ case by case due to individual circumstance. Therefore I thought it'd be best to just ask!

    I'll aim to keep this as brief as possible:

    I've been employed by 'Company X' for approx. 2 years, working on secondment for 'Client Y' for just over 1 year now. The project I'm working on (alongside a number of self-employed contractors) is due for renewal shortly ahead of 2016. Client Y has informed me however that they're unlikely to request the services of Company X for the remainder of the project, heading into 2016 and beyond (additional note: the PO between Company X and Client Y expires 31 Dec 2015).

    However, Client Y has discussed the possibility of requesting my services as a self-employed contractor, much in the same way my other colleagues working on the project operate for Client Y.

    Now I'm fully aware of the non-solicitation clause in my contract (usual generic non-solicitation clause content with a 12 month period included), however I'm also aware that these clauses, as mentioned earlier, are judged on a case by case basis. Since Client Y is not set to request the services of Company X in 2016 am I therefore right in thinking that this would negate any enforcement of the non-solicitation should I proceed as a self-employed contractor into 2016?

    Any information on this particular query would be greatly appreciated.

    Thanks in advance,

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    Since Client Y is not set to request the services of Company X in 2016 am I therefore right in thinking that this would negate any enforcement of the non-solicitation should I proceed as a self-employed contractor into 2016?
    I would think so, yes. Wouldn't there be a restriction of trade otherwise, given the situation?

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    Quote Originally Posted by MrMarkyMark View Post
    I would think so, yes. Wouldn't there be a restriction of trade otherwise, given the situation?
    Hmmm I dunno. Piercing the corporate veil looks at identifying people within shell organisations that attempt to circumvent handcuffs. They can look through the company structure to identify the individual.

    A simple example would be where a businessman has left his job as a director and has signed a contract to not compete with the company he has just left for a period of time. If he sets up a company which competed with his former company, technically it would be the company and not the person competing. But it is likely a court would say that the new company was just a "sham", a "fraud" or some other phrase,[1] and would still allow the old company to sue the man for breach of contract. A court would look beyond the legal fiction to the reality of the situation.
    https://en.wikipedia.org/wiki/Pierci...corporate_veil

    The PO might expire but I am sure there is a solicitation handcuff in the contract that will be enforce beyond the end of the PO. The bit about taking people on for the remainder is irrelevant. It's the date Company X stop

    The real question would be is this clause fair and reasonable. Without either of those it won't stand. You could argue Company X is no longer in any position to gain further revenue from you so a handcuff to protect the old clients loss is irrelevant, there is no loss to prove. The fact it's 12 months makes me think it's badly written anyway so will most likely be too generic to stand.

    The massive problem is that if they do renew the PO you could be in a world of tulip and the handcuff will be rock solid. Company X will lose revenue by you going direct.

    I take it you were properly employed and not just using the wrong terminology but you are now going to be a contractor? It does raise and interesting IR35 question though. We did discuss engagements by consultancies the other day but don't think we really thought about this situation. You could argue that although you were via a consultancy you were seconded to the client so can HMRC claim you are Friday to Monday contractor arriving back up on site to do the same thing but under a different remuneration? You should be ok from a working practices situation though if the client already has contractors.

    I'd also look at your situation regarding 24 month rule as well, you could be caught from the off if they give you a 12 month contract.
    Last edited by northernladuk; 11th September 2015 at 13:56.
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    Saying that I just had a thought. If Company X then expect you to go to a different client and make money they will still be losing out so maybe it will still stand as this is generally exactly what these clauses are for, to stop clients taking Company X's employees...

    Sorry for the confusion. I kept getting mixed up with an agency situation.
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    Quote Originally Posted by northernladuk View Post
    Saying that I just had a thought. If Company X then expect you to go to a different client and make money they will still be losing out so maybe it will still stand as this is generally exactly what these clauses are for, to stop clients taking Company X's employees...
    Yep, this.

    Plus there may well be something in the contract between X and Y which means that Y has to pay X some money anyway for inducing their employee to breach their contract.

    You need to talk to an employment lawyer, they need to talk to a contract lawyer.
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    Interesting comments gents, will be interested in others take on this.

    Good point, if this is through a consultancy, the handcuff clause would hold water.

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    I'd front up to the Client Co and ask them if there's work for you beyond the end of the year.
    Then if they offer nothing you're free to work for End Client Co.

    EDIT: The timing of this is probably important - Client Co may not know at the moment and you need to manage End Client Co expectations accordingly. Your honesty will probably be appreciated by ECC
    Last edited by LondonManc; 11th September 2015 at 14:54.
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    Quote Originally Posted by LondonManc View Post
    I'd front up to the Client Co and ask them if there's work for you beyond the end of the year.
    Then if they offer nothing you're free to work for End Client Co.

    EDIT: The timing of this is probably important - Client Co may not know at the moment and you need to manage End Client Co expectations accordingly. Your honesty will probably be appreciated by ECC
    Client Co doesn't exist. This is dealing with their permanent employer - if there isn't work, then they would be looking at redundancy proceedings.

    And if that's the path, then the OP may very well be best off taking that pay off instead.
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    Quote Originally Posted by TheFaQQer View Post
    Client Co doesn't exist. This is dealing with their permanent employer - if there isn't work, then they would be looking at redundancy proceedings.

    And if that's the path, then the OP may very well be best off taking that pay off instead.
    Ah, right. My mistake, presumed it was a contractor as a consultant arrangement.

    Makes it more complicated but if PermCo are potentially going to make redundancies as a result of losing ClientCo, taking VR as soon as it's offered is the best route I can think of. They've made you redundant which negates the solicitation clause so all is good. If no redundancies are in the offing then it's a more complex negotiation.
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    All,

    Thanks for your detailed response so far.

    Just to shed a little more light on my situation and my current position:

    - As mentioned in the OP I am employed as a consultant by Company X, working on secondment as a consultant for Client Y for the past 18 months.
    - Due to my close working relationship with Client Y, I have raised the potential of 'going solo' from 2016 onwards, in full knowledge that the existing PO between Company X and Client Y is due to end at the end of the year. Client Y is fully supportive of the potential switch and is unaware of any formal 'non-poach' clauses that may exist in the T&C's between Client Y and Company X.
    - I've yet to raise this issue with Company X as it's still in the idea stage, but I just want to be sure that once I raise the potential switch that I will be in a solid legal position to justify my move from employed to contractor.
    - As for circumstance, I work on the project on behalf of Company X as I'm the only consultant who could feasibly work on the project (location, work hours, experience, availability etc). That said, I'm sure they could argue that they could just employ a new consultant to fill my space? All hypothetical but I'm just playing Devils advocate to myself here.

    Again, responses majorly appreciated

    Cheers

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