Non Contractual non-compete agreement

[Nando]

Hi,

I'm contracting at a company (X) who have lost a business contract which has now been awarded to another company (Y)

My contract with X has no non-compete clauses, so i should be able to approach Y about moving to them

However, Y needs assistance from X to prepare for taking over the project and it transpires that X have forced Y agree to a verbal "Gentleman's Agreement" that no staff/contractors will be poached.

So, my contract with X runs out in a couple of weeks, but this clause - which i did not sign as part of my contract- means a potential client wont speak to me until i am out of contract.

Seems pretty unreasonable, and presumably illegal, but what are my options when my complaint is about a deniable, verbal agreement?

Thanks

[SueEllen]

If the client has that agreement then there is nothing you can do.

Look for other contracts and if the client wants you then fine, if not you have somewhere else to go.

[Sockpuppet]

Seems pretty unreasonable, and presumably illegal, but what are my options when my complaint is about a deniable, verbal agreement

Nope. Remember your co is unable to work for Company Y. Doesn't mean an umbrella would be.

[northernladuk]

Nope. Remember your co is unable to work for Company Y. Doesn't mean an umbrella would be.

I think you need to be careful here. Going through a different company doesn't bypass non compete clauses. We know closing your LTD and reopening another bypasses these clauses so going via an umbrella is unlikely to work either if the proverbial hits the fan.

This is shown as an example in the Piercing the Corporate Veil Wiki page..

Piercing the corporate veil - Wikipedia, the free encyclopedia

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 set 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.

The example given doesn't really reflect that of the OP but it proves that hiding behind a different entity could be a problem.

[TheFaQQer]

My contract with X has no non-compete clauses, so i should be able to approach Y about moving to them

]
Correct

However, Y needs assistance from X to prepare for taking over the project and it transpires that X have forced Y agree to a verbal "Gentleman's Agreement" that no staff/contractors will be poached.

Good idea.

So, my contract with X runs out in a couple of weeks, but this clause - which i did not sign as part of my contract- means a potential client wont speak to me until i am out of contract.

Why not? Have you tried? Your contract runs out in a couple of weeks. If there is nothing keeping you from staying with X, then you can talk to Y without violating their agreement - they aren't poaching you, you are available for new contract work in a couple of weeks, and are looking for opportunities.

Or just wait until your contract runs out and then talk to them.