Contracts can be a bind

I recently posted a blog on restrictive covenants and the government’s view that they may be stifling competition.  This question has to be debated and resolved but for now restrictive covenants remain part of the employment landscape.

I regularly advise individuals who are leaving a business but in contrast not many seem to take advice when joining a business, which I find surprising as managers and executives are often entering into complex contractual arrangements. It may be that employees will only take advice when they believe it to be absolutely necessary. In many cases the contract may be given a scant once over and I am often told when advising on an exit negotiation, that a contract cannot be found or is lost, which suggests that it is not viewed as being a particularly important document.

A new job is always an exciting time and a positive experience.  The offer letter comes in and if the headline terms (eg salary, notice, bonus, holiday) look okay then it’s all systems go.  There is time to enjoy that period before the new job starts, make sure you have some smart new work attire and you can finally put that difficult exit from your previous job behind you.  Is there any need to think about how things will go in the new job and the possibility that you may move on again?  Anyway, negotiating terms of the employment contract might upset your new employer or alert them to potential future issues if say you are arguing about restrictive covenants?

The alternative is to recognise that employment agreements can have complex contractual provisions, not least post-termination restrictions so getting some advice may be a good thing to do, so at least you understand the obligations you are entering into, even if you are not going to negotiate.  Having practised in this area for a number of years I do tend to harp on about restrictive covenants and as part of this, new recruits should understand what is going to happen when they have to leave the business.  Statistically we now move jobs much more often and anything which potentially restricts your choice and options in the future should be looked at.  You should consider the extent of any post-termination and confidentiality obligations.  Are you going to be subject to garden leave during a long notice period?  Long notice periods can be a comfort but also a considerable restriction for an exiting employee.  What about clients you have dealt with for a number of years?  They may follow you to the new company and if they do, they become the “property” of that company unless you negotiate their exclusion from any post-termination restrictions.  The time to do this is obviously before you sign up.

You should also consider any issues over LinkedIn and other social media.  How does the new employer deal with these? Is there a policy covering LinkedIn and other forms of social media?  This may be contained in the Handbook which you don’t see until you join but the contract may say you are subject to the company’s policies and procedures.

What if you take advice and that advice is that the covenant is, on the face of it, unfair.  That is of some comfort as a recent case (Bartholomew Agri Foods) has confirmed that restrictions are judged in relation to the job role, at the time they are entered into, so a covenant does not become fair as you move up the managerial tree if it wasn’t fair in the first place.  A note of caution though, fairness is a matter for the Court.  An employer may still apply pressure through a request for undertakings and pursue an injunction which is an interim stage before a full trial.

My suggestion is to think ahead and understand what your position will be in the event you move on again.  There is plenty to think about, including confidentiality, garden leave, notice periods, restrictive covenants, your existing clients and social media profile.  Don’t be afraid to negotiate, your employer has made an offer so is keen for your to join, your bargaining position may not be as good in future.

Iain Jenkins

Iain Jenkins

Iain Jenkins
Employment Director
Employment Team
0113 227 9308

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