Non Compete Clause

NedLundy

Ive been wondering about the validity of such a clause in circumstances where the employer has seemingly abandoned the client.

For example:

Company A has been contracted to supply X amount of engineers (which are employed through an umbrella company to company A) to Company B for a project.

During this time the point of contact for Company A has been unreliable and unreachable and has not been able to supply the required number of engineers to company B.

Upon completion of the contract Company B has decided it wants to directly contract the now unemployed and out-of-contract engineers for a new project through the umbrella company whilst cutting out Company A as they felt that Company A abandoned them in the previous contract.

Would the non compete clause the engineers had signed for the previous contract block this or since Company B was abandoned by Company A would that nullify the non compete clause?

Just pondering the purely hypothetical question and would like to know what others think.

nuac

Mod
Ok, thanks. Hypothetical answers, complying with forum rules, welcomed

Pat Mustard

NedLundy wrote: »

Would the non compete clause the engineers had signed for the previous contract block this or since Company B was abandoned by Company A would that nullify the non compete clause?

First, there is the contract between A and B.

Secondly, there is a contract between A and a company which supplies engineers.

Thirdly, the engineers have non-compete obligations. In many instances, non-compete clauses are written into employment contracts. In the current instance, you say that the 'umbrella company' employs the engineers. Is it the case that there is a non-compete clause in the engineers' contracts of employment with the umbrella company? If so, what does it say? How exactly does it purport to restrict the engineers.

You say that the contract between A and B has been completed. It seems that B was dissatisfied with the manner in which A performed the contract.

You ask if B's dissatisfaction with A affect the engineer's obligations under a non-compete clause. These are separate contracts and it appears that the parties are also separate. I don't see how A's dissatisfaction with B, even it amounted to breach of contract, could invalidate a non-compete clause in separate contract.

Mr. Incognito

It depends.

Ive seen contracts where an umbrella company was used to put people in as self employed contractors.

In those contracts the non compete was actually between the umbrella company and the hiring company and as such wasnt personally binding on the secondees.

The answer is in the contract terms