Non-competition / Restrictive covenants

[MirrorsEdge]

Hi there,

I'm hoping for some advice from those who may have faced similar circumstances.

Company A - Me
Company B - 3rd Party consultancy
Company C - End Client


I'm providing consultancy services through Ltd Company 'A', to a Consultancy firm 'B'. I am engaged on an occasional basis to do smaller pieces of work for various clients of Consultancy firm B. These are discreet pieces of work with defined deliverable etc.

Four months ago I did two weeks of work for one of B's clients, Company 'C''. I then took some time out and did another few pieces of work for B.

B have since decided that they want to move away from using contractors and so myself and a few others have had our contracts terminated. Mine will run out when I finishd the last piece of work I'm delivering in about 3 weeks.


In my looking around for contract work, a recruitment agency contacted me with information on a contract that sounds as if it would last approx 6 months. After learning more about the position and the kind of work involved I said I was happy to be put forward. I was then told it was for a contract with Company 'C'. Company 'C' had engaged their recruitment firm, and had given some criterea which had lead them to me (not beyond the realms of possibility that they were given my name.

The work itself is not a continuation of something I've done before and could reasonably be regarded as not something that Company B would offer as a service to Company C.

The only piece in my contract with B that comes close to commenting on my situation is as follows:


Non-Competition
The Supplier (Company A) shall not be concerned in, or provide services for any other person, firm or company during the term of this Agreement where such person, firm or company shall be concerned in a business or activity which is in the reasonable opinion of Company B in competition or conflict with that of Company B's, without Company B's prior written consent. Such consent will not be unreasonably withheld. This provision shall remain in force for 12 months following the date of termination or expiry of this Agreement.


... which to me only shows concern for potential competitors to Company B, and doesn't place a restriction on a Contractor being taken on directly by Company C.

Separately, I have learned that in the past month (after my work with company C but before they contacted me) that Company C does not intend to renew their use of Company B's services. Company B had until recently provided some ongoing tech support.


Wondering if anyone knows where I stand in terms of the offer of work from the Agency to contract with Company C?

[The Agents View]

Hi there,

I'm hoping for some advice from those who may have faced similar circumstances.

Company A - Me
Company B - 3rd Party consultancy
Company C - End Client


I'm providing consultancy services through Ltd Company 'A', to a Consultancy firm 'B'. I am engaged on an occasional basis to do smaller pieces of work for various clients of Consultancy firm B. These are discreet pieces of work with defined deliverable etc.

Four months ago I did two weeks of work for one of B's clients, Company 'C''. I then took some time out and did another few pieces of work for B.

B have since decided that they want to move away from using contractors and so myself and a few others have had our contracts terminated. Mine will run out when I finishd the last piece of work I'm delivering in about 3 weeks.


In my looking around for contract work, a recruitment agency contacted me with information on a contract that sounds as if it would last approx 6 months. After learning more about the position and the kind of work involved I said I was happy to be put forward. I was then told it was for a contract with Company 'C'. Company 'C' had engaged their recruitment firm, and had given some criterea which had lead them to me (not beyond the realms of possibility that they were given my name.

The work itself is not a continuation of something I've done before and could reasonably be regarded as not something that Company B would offer as a service to Company C.

The only piece in my contract with B that comes close to commenting on my situation is as follows:


Non-Competition
The Supplier (Company A) shall not be concerned in, or provide services for any other person, firm or company during the term of this Agreement where such person, firm or company shall be concerned in a business or activity which is in the reasonable opinion of Company B in competition or conflict with that of Company B's, without Company B's prior written consent. Such consent will not be unreasonably withheld. This provision shall remain in force for 12 months following the date of termination or expiry of this Agreement.


... which to me only shows concern for potential competitors to Company B, and doesn't place a restriction on a Contractor being taken on directly by Company C.

Separately, I have learned that in the past month (after my work with company C but before they contacted me) that Company C does not intend to renew their use of Company B's services. Company B had until recently provided some ongoing tech support.


Wondering if anyone knows where I stand in terms of the offer of work from the Agency to contract with Company C?

Two choices:

a) tell them, and ask for written consent
b) Don't tell them, hope they don't notice, plead ignorance if they do.....

If it was me, I'd do a) as people talk, but b) is unlikely to ever be pursued, and even if it was, they're unlikely to be able to make a legal case for it.....

[GillsMan]

Two choices:

a) tell them, and ask for written consent
b) Don't tell them, hope they don't notice, plead ignorance if they do.....

If it was me, I'd do a) as people talk, but b) is unlikely to ever be pursued, and even if it was, they're unlikely to be able to make a legal case for it.....

I agree with TAV on b). Tbh, I'd consider not telling them, but maybe take legal advice from your company's legal advisors on the clause. With that legal advice in the bag, you can then go forward and accept the role with Company C.

12 months is likely to be seen as restrictive based on what the OP has said.

[northernladuk]

I didn't read all of this but the crux of the clauses is who is losing out and by how much. The law favours the party that can prove a loss. If this is clearly the case it could get very uncomfortable for you both from a direct action point but also the situation flitering through all the clients who may drop you like a stone as a liability. You might want to weather the storm but they might not.

Saying that we have had many questions about non competition clauses here but to date I don't remember a post about one being invoked and someone asking what to do next which I guess is telling point.

Still, I would look carefully at the situation and (being objective) understand what the losses are to each party. If you were going to leave and go somewhere else anyway there is no loss so it will just be handbags at 10 paces. If any of the chain can demonstrate a solid loss then I would tread much more carefully.

[d000hg]

Two choices:

a) tell them, and ask for written consent
b) Don't tell them, hope they don't notice, plead ignorance if they do.

What about:

c)start a new Ltd company D, since the agreement is with company A?

[northernladuk]

What about:

c)start a new Ltd company D, since the agreement is with company A?

I didn't think this stood up as the OP would be still connected and doing the work. It would be seen as a get around which won't carry any weight if needed.

[d000hg]

I didn't think this stood up as the OP would be still connected and doing the work. It would be seen as a get around which won't carry any weight if needed.

I did always wonder about this as serious question - if you have a B2B contract which doesn't mention employees in the restriction clauses, isn't it about what the contract says and therefore their fault for supplying a bad contract?

[TheFaQQer]

These are discreet pieces of work

You had to keep them really quiet and not tell anyone else about them? Or were they discrete pieces of work?

...Stuff...

Either ask them or don't. If it went legal, then 12 months would be struck out as too restrictive (in all probability). However, if C knows that you've been at B, and they have a contract which stops them "poaching" you, then having already resolved the situation will prevent C from binning your CV immediately to avoid hassle with B.

[Wanderer]

c)start a new Ltd company D, since the agreement is with company A?

I don't know if this would work, there was a case where a car salesman left his job and worked somewhere else and tried to take his customers with him and this ended up in court....

[SueEllen]

I don't know if this would work, there was a case where a car salesman left his job and worked somewhere else and tried to take his customers with him and this ended up in court....

WHS

There are quite a few cases covering people who take their clients or client list with them when they move roles or start up themselves.