Company prohibiting employee [via contract] from working for competitor

RangeR

Hey,

Just wondering. Hypothetically, let say there was a clause in an employee contract prohibiting said employee from working with another competing company for at least 12 months after termination.

In that, company A can dictate who someone cannot work for [for ANY period] prior to employment in company A.

I can understand why companies would put a clause like this in but would this be deemed legal / illegal / gray area?

Our man in Havana

12 months would be reasonable enough for a non compete clause. It is the unlimited clauses that amount to restraint of trade that would be deemed unreasonable.

So long as the clause is reasonable, there is no problem.

RangeR

Our man in Havana wrote: »

12 months would be reasonable enough for a non compete clause. It is the unlimited clauses that amount to restraint of trade that would be deemed unreasonable.

So long as the clause is reasonable, there is no problem.

Cheers Havana. If, for a moment, we forget about "reasonable". Would/could such a clause be seen as illegal and tantamount to restraint of trade?

For example, if Company A hired a software developer who some day left that company... that clause would almost amount to said employee having to reskill for 12 months as almost any future company could potentially be deemed to be competitive.

Our man in Havana

http://careeradvice.loadzajobs.ie/career-management/your-rights-at-work/workplace-rights-non-compete-clause-3190
http://www.askaboutmoney.com/showthread.php?t=30480

RangeR

Hmmm, so it's still a bit of a gray area, then. Until it's challenged in court. Maybe it already has been. I dunno. I'll keep digging.

cafecolour

I believe these are very rarely enforced, except in the case where you have knowledge of confidential and/or patented information that would be of direct help/interest of the company you go to.

For example, if a web developer that makes HTML pages leaves Google and goes to Microsoft to work on Bing, they're not going to care.

If one of the main programmers who works on Google's search results algorithms does the same, they might try and enforce the clause.

murrayp4

As far as I remember restraint of trade clauses are prima facie void. The burden of proof that the clause is reasonable lies with the party attempting to enforce it.

pirelli

This issue arose recently in America......

A St. Louis County Circuit Court judge has now declared null and void the clause barring Hufford from working locally as a professional tax preparer for two years when his employment with Individual Taxes ended.

The permanent injunction blocks Individual Taxes from invoking the noncompete agreement imposed on Hufford and other employees.

In a decision issued on Sept. 3, Circuit Court Judge John Ross ruled the company's former employees "possess no specialized knowledge ... to prepare returns."

"The position of tax preparer with Individual Taxes is more akin to a data entry position," Ross wrote in his ruling. "As such, the Court finds generally that a tax preparer with Individual Taxes is not in a position to acquire the type of influence over its customers that would justify enforcement of a non-compete agreement."


Also

On page 3 of the September 4, 2005 report of the European Labour Court (please see link below), it states:

“[G]enerally a non-compete clause will not be upheld if it is to last for more than 6 months.”

http://www.ilo.org/public/english/dialogue/ifpdial/downloads/judges06/irela...
http://www.irishstatutebook.ie/1991/en/act/pub/0024/sec0004.html#sec4