contract exclusion clause

turncorner

Hello folks.

I have been working in IT for a few years now and have changed jobs a few times. In most of the contracts that I have encountered, both as a permanent employee and as a contractor, there has been a clause preventing the employee from working for the competion (in the case of a permanent employee) or for the client (in the case of contracting through an agency). Does anyone know whether or not these clauses are enforcable, or has anyone had any experience of them being invoked or ignored?

Regards

TC

qwertz

AFAIK working for the competition wouldn't hold up in court because it would make you unemployable. Make sure future contracts don't have this kind of clause in it. I'd rather walk away from an offer than take a job with a clause like this.

Working for a client is a fair enough clause (contracting through an agency). Most of my contracts have something similar in it.

leeroybrown

I am not a lawyer but to my knowledge these contractual clauses have always proven legally unenforceable unless the employee is a director of the company or in a position where the company can demonstrate that the employee has extremely significant business critical knowledge. The problem is that if they try then they may well be able to get a legal injunction preventing you from working pending a case. This could render you unable to work for a period of time.

If you do find yourself in an area like this with a potential conflict of interest then I'd suggest talking to someone who specialised in employment law.

Faerie

When I did contract law this sort of problem was dealt with. From the abstract questions (I don't remember any actual cases!) we did in class exclusion clauses like this can be enforceable. They do have to comply with certain rules though - for example they can only stop you working for competition based near them. In other words they can't stop you from working anywhere in Ireland. Stopping you from taking clients, that you met working for them, is also enforceable. However I'm not sure if being on a temporary contract could affect this...I'd definitely reiterate what the above poster said, and talk to a lawyer. Exclusion clauses like that could really affect your chances of employment.

nesf

Faerie wrote:

When I did contract law this sort of problem was dealt with. From the abstract questions (I don't remember any actual cases!) we did in class exclusion clauses like this can be enforceable. They do have to comply with certain rules though - for example they can only stop you working for competition based near them. In other words they can't stop you from working anywhere in Ireland. Stopping you from taking clients, that you met working for them, is also enforceable. However I'm not sure if being on a temporary contract could affect this...I'd definitely reiterate what the above poster said, and talk to a lawyer. Exclusion clauses like that could really affect your chances of employment.

That's pretty much my (layman's!) understanding of them. You can't be forced into signing them either afaik if you are already in a job or at least I know people who've gotten away with refusing to sign them.

Either way, this is better suited to the Legal Discussion forum than here. Moved.

Jo King

There was a case about 7 years ago which involved a hairdresser who had worked in Peter Marks. A condition in her contract that she not within a certain radius of her former salon was upheld by the Court, which granted an injunction to restrain from working in that area. Restrictive clauses have to be reasonable by virtue of geography and time. If the clause is not reasonable it will not enforce it, nor will it modify it to make it reasonable.

yournamehere

Called contracts in restraint of trade. Perfectly enforceable as long as they are not too wide. numerous case law - john orr and office angels spring to mind. Must be for a deifned period of time, not excessive.

turncorner

Thanks very much for the replies folks. It's an academic question at the moment . I'm not going to be putting it to the test, so I won't be able to report back on how I got on. All the same, I appreciate you all taking the time to send your thoughts.

Gobán Saor

Also bear in mind, a lot of employers simply dust down their contract.doc file and issue these as standard. The only way the employer can enforce the clause is to look for a high court injunction. In practice, the vast majority of employers simply don't bother with the time or expense.