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Non-compete

On occasion we see employment contracts including post termination non-compete clauses. There is a single body of law covering ranges of seniority, responsibility and budget. Morally constraints that may be seen as reasonable for Board members or senior high value salespeople are not so suitable for more junior staff even those with high personal customer loyalty.

The Govt are considering changing the law, either rendering them unenforceable or ensuring that people are compensated for these restrictions.

Our view is that, today, to be enforceable, non-compete clauses need to be reasonable and proportionate. These needs are to be measured in the context of the businesses legitimate need and the worker’s right to make a living and change employers.

Within our branch, many employers will have bought their contracts from consultancies or lawyers. Many of these contracts will have been tested over a portfolio of customers and extended to cover the needs of all the businesses. This will often mean that the non-compete clauses are insufficiently tailored to the specific needs of their customer and may this be unenforceable.

Legal pursuit on either side is expensive which is an inhibition for pursuit although if an employer starts the process, the lawyer’s letters can be quite intimidating, but they will need a reason to pursue, as it costs them money too.

We will consider this at our next branch meeting, and propose to campaign for an abolition of these clauses for 20% tax payers, and mandatory compensation for those to whom they will still apply.

This article must not be seen as legal advice, it is designed to inform discussions on what the law should be, and not what it is.

Posted: 5th January 2022

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