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Restrictive covenant. I think its too broad - what do you think?

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    Restrictive covenant. I think its too broad - what do you think?

    Hi,
    I am locked with my agancy regarding a restrictive covenant. I am a freelance developer for the NHS, and have applied for a similar position - different team/project/reporting structure/location/skill set with the client after seeing an advert on one of their job boards. My agent has now trown out all of their toys and are threatening with an injunction.

    I think the covenant is unreasonably broad as it covers not just NHS Wales, but Subsidiaries, Associates, and clients and is for an unreasonable period of 12 months. For small firms maybe it's acceptable, but the NHS is huge so it covers a lot of ground. I've posted the relevant bits below, but any advice would be most welcome.

    Thanks in advance


    -----
    11.2 The Service Provider and its Directors undertake that they shall not and that they shall procure that the Consultant(s) shall not enter into any agreement, whether directly or indirectly, to supply services of a similar nature to the Client or a subsidiary or associated company of the Client or to the Client’s clients, other than through the Company for a period of 12 months following the termination of the Agreement.

    11.3 The Service Provider and its Directors hereby acknowledges that the Company expends significant resources in sourcing and maintaining its clients and is entitled to protect its commercial interests.

    11.4 The Service Provider acknowledges that should the Client or a third party to whom it has introduced the Service Provider wish to utilise the Service Provider’s services other than through the Company, then the Company may be able to charge the Client a fee or agree an extension of the Supply with the Client.
    Last edited by SportsQs; 18 January 2012, 11:41.

    #2
    I think we need to understand your status in all of this, so more info required:

    How do you operate? Ltd Co, Umbrella, or what?

    On the contract covenant(s), I'm struggling to see why you signed this.
    Clarity is everything

    Comment


      #3
      It rather hinges on who the current client is. If it's the NHS, then you have a problem. If it's the local Trust or similar, then 11.2 is unreasonable and represents a clear restraint of trade. 12 months is unreasonable for the agency to have, it's only reasonable for a client where you provide significnat commercial value. 11.3 is immaterial and 11.4 doesn't apply since you weren't introuced to the new opportunity by your existing client.

      Let them take you to court. Any half-comeptent solicitor can get it thrown out as being "unreasonable", which is an understood legal concept.

      However, I echo SteelyDan's question - why on God's earth did you sign it in the first place?
      Blog? What blog...?

      Comment


        #4
        I don't know the Welsh NHS that well, as I mainly work in England. But if Welsh NHS boards are established as English NHS Trusts, then they are not subsidiaries of NHS Wales or anything similar. They would be independent statutory bodies. I would do a little research and then take no notice.

        Comment


          #5
          Thanks for the reply guys,
          The client is a service provider within the NHS, it provides IT services to the Trusts/Doctors/Dentists etc... I'm operating under an umbrella company - been meaning to go Ltd for ages but not yet got around to it. Items 11.2 and 11.3 only apply if I have opted out of regulations. I initially did not opt out of regulations, but I think I was talked into it by my agent and changed my mind at a later date. However, part of the opt-out schedule reads:

          "The agreement that the Regulations shall not apply has been reached before the Service Provider has been introduced or supplied to any person and before the Consultant has been introduced or supplied to the Client."

          The contract started on 10/1/2011, and I decided to opt-out on 11/1/2011, one day after contract start date / meeting the client.

          Why did I sign? I assumed it was a standard contract (been doing this for 15 years), didn't bother to read it - that's the last time I make that mistake.

          Just to clarify the structure:

          End Client [NHS] -> Service Provider -> My Agent -> me

          So the client has engaaged a service provider to develop their system, the service provider has recruited myself through my agent.

          It's the service provider that is kicking up a fuss - my agent is very chilled about it, although I'm sure they would like to see it enforced as well.

          Thanks Guys.

          Comment


            #6
            OK, that's different. You are providing a necessary and unique business skill to your client, so them limiting your freedom to sell those skills elsewhere in competition to them is not unreasonable. Sounds like you need to get back to the negotiating table. Also the agency opt out is irrelevant here, this is between you and the service provider and an agreed contract.

            You're not opted out though. Once he client knows who you are, you can't be unless you opted out beforehand. I suggest that, 15 years or not, you need to do some homework.
            Blog? What blog...?

            Comment


              #7
              first things first, remove your name from your first post.

              Comment


                #8
                Originally posted by SportsQs View Post
                My agent has now trown out all of their toys and are threatening with an injunction.
                Tell them that the opt out you signed was invalid because it was after the start date therefore the restraint of trade is unenforceable. End of story.

                It may be worth paying a solicitor a few quid to write a letter setting out your position and warning them that you will not tolerate any attempt to damage your business by seeking to enforce a restraint of trade which is clearly unenforceable otherwise the scumbag agency will try all sorts of underhand tactics like threatening the client.
                Free advice and opinions - refunds are available if you are not 100% satisfied.

                Comment


                  #9
                  Originally posted by SportsQs View Post
                  My agent has now trown out all of their toys and are threatening with an injunction.
                  The opt out is invalid - it was signed after you had been introduced to the client.

                  Tell them to bring on the injunction - they won't get one for two reasons. One - there is no legal case here. Two - there is no legal case here. Now I realise that, technically speaking, that's only one reason but I thought it was such a big one it was worth mentioning twice.
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                  Comment


                    #10
                    Thanks Guys,
                    TheFaQQer & Wanderer - I've taken legal advice and the solicitor agrees with you guys - no case to answer, due to opt-out not being valid. So I'll inform the agent that I will not be withdrawing from the role.

                    Thanks again!

                    Comment

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