Restrictive covenant - who am I restricted from doing business with?

[fidgetated]

Hi,

My contract details the relationship between 'the Service Company' (my Ltd Company) and 'the Company' (my agency), but does not name either the consultancy that my agency contracts me to, or the client for which I work.

I have a restrictive covenant in my contract, and I'd like some opinions on exactly who I am restricted from working with as a result of this covenant. I've been offered a contract within another division of the end-client but, as division has no relationship with either the consultant or my agency, they want me to go via one of their own preferred suppliers.

As far as I can see, my contract is with the agency and, as they have a relationship with the consultancy (but not the end-client), it is the consultancy from whom I'm restricted - or is this just wishful thinking? As mentioned, neither the consultancy nor the end-client are actually named in the contract.

The restrictive covenant in my contract reads as follows:

6.5 The Service Company covenants with the Company that it, and shall procure that the Consultant, will not, directly or indirectly, on their own behalf or on behalf of or in conjunction with any firm, company or person:

6.5.1 for twelve months following the Termination Date solicit or endeavour to entice away from the Company the business or
custom of a Customer or Prospective Customer with a view to providing goods or services to that Customer in competition with
any Restricted Business or otherwise induce, solicit or entice or endeavour to induce, solicit or entice any Customer to cease
conducting, or reduce the amount of, business with the Company or discourage or prevent any Prospective Customer from
conducting business with the Company;

6.5.2 for twelve months following the Termination Date be involved with the provision of goods or services to, or otherwise have any
business dealings with, any Customer or Prospective Customer in the course of any business which is in competition with any Restricted Business

Thanks in advance for any opinions on this.

[BolshieBastard]

What, so nowhere on your contract does it state who 'your co' is nor who the 'agent co' is? Is there no statement of what certain things mean? Did you bother getting the contract reviewed in the first place?

If not, you could effectively be prevented from working for the end client, the end clients other companies or divisions and even unrelated companies who do work for your end client!

[minstrel]

If it's a big client, you're being offered a role in a completely different division and the client is effectively telling you the role is only being offered on condition that you go through a different agent on their PSL you should be fine.

There's a chance your current agency might protest (if they find out) but it's possible that if any legal challenge were taken the clauses would be seen as an unfair restraint of trade. Did you opt out of the agency regulations?

It they do find out, be prepared to have a battle getting your final invoices paid.

[SueEllen]

If you are opted-in, which you may be by default due to the opt-out not been done properly, the covenant isn't valid so you can ignore it. I suggest you check whether you are properly opted-out which most contractors are not.

If not, then the other 2 above have pointed out the obvious flaws in your contract.

If the agent starts threatening you tell them to where to go, and if they persist get a letter from one of the lawyers recommended on this board telling them to where to go.

[Wanderer]

6.5.2 for twelve months following the Termination Date be involved with the provision of goods or services to, or otherwise have any business dealings with, any Customer or Prospective Customer in the course of any business which is in competition with any Restricted Business

Sounds overly broad to me and probably wouldn't stand up in court because it's a restraint of trade. It might be enough for agencies to bully clients into not doing business with you though...

You know that opt out that the agency were so desperate for you to sign? If you hadn't signed it (and you are not obliged to sign it) then this clause wouldn't have been in your contract.....

[fidgetated]

What, so nowhere on your contract does it state who 'your co' is nor who the 'agent co' is? Is there no statement of what certain things mean? Did you bother getting the contract reviewed in the first place?

At the risk of sounding like a complete numpty, I didn't get the contract checked. No excuse, other than I had been out of contract for several months and would have signed pretty much anything at that point.

The contract names my limited company, and the agency, but does not name the end-client, or the consultancy through which I work.

[fidgetated]

If it's a big client, you're being offered a role in a completely different division and the client is effectively telling you the role is only being offered on condition that you go through a different agent on their PSL you should be fine.

There's a chance your current agency might protest (if they find out) but it's possible that if any legal challenge were taken the clauses would be seen as an unfair restraint of trade. Did you opt out of the agency regulations?

I'm not a long-term contractor having only had two contracts since leaving a permie role - and this is the first I've heard of opting in/out (nobody but myself to blame!). I've checked my contract and it contains an opt-out clause - I've had a read of the regulations though and am pretty sure it's invalid as I didn't sign anything prior to being interviewed.

[fidgetated]

Sounds overly broad to me and probably wouldn't stand up in court because it's a restraint of trade.

That's what I'm hoping - and why I wasn't overly worried about signing the contract. Will definitely get my contract reviewed in future though!

[fidgetated]

If the agent starts threatening you tell them to where to go, and if they persist get a letter from one of the lawyers recommended on this board telling them to where to go.

Good advice - the agency is likely to find out if I do go directly to the end-client as they have a very close relationship with the Consultancy. I'll have some contact numbers ready for legal advice if the agency does kick up a fuss.

[TheFaQQer]

What's the definition of a "Restricted Business"?