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Ben Jones
Ben Jones, Solicitor
Category: UK Employment Law
Satisfied Customers: 38308
Experience:  Expert in UK Employment Law
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I have a contract that states that I cannot set up my own business

Resolved Question:

I have a contract that states that I cannot set up my own business in the same area of business as them for 6 months after leaving the company but doesn't say the geographical region i.e 5 miles etc.

I left the company 2 months ago and have set up the same business as them 7 miles away. Am I in breach of my contract
Submitted: 11 months ago.
Category: UK Employment Law
Expert:  Ben Jones replied 11 months ago.

Ben Jones : Hello, my name is XXXXX XXXXX it is my pleasure to assist you with your question today. Have you used any trade secrets, confidential information or deliberately poached clients?
Customer: No I've only used there pricing strategy
Ben Jones :

It is common for employers to want to protect their business interests from unfair competition by current and ex-employees. This applies especially to employees who have knowledge of sensitive and valuable information, have considerable influence over the workforce or have strong customer connections. However, at the same time it is in the public interest to ensure that employees are free to move between employers and use their skills, knowledge and experience in a new setting.


 


Whilst employers try and impose certain restrictions on their employees, under the doctrine of restraint of trade, any contractual term which seeks to restrict an individual's freedom to work for others or carry out his trade or business is illegal and unenforceable. The exception is when the employer can show it has a legitimate business interest that requires protection.


 


Legitimate business interests (LBIs) are commonly accepted to include:



  • Trade secrets and confidential information

  • Trade or customer connections

  • Stability of the workforce


 


An employer cannot impose a restrictive covenant merely to stop someone competing, but it can seek to stop that person using or damaging something which legitimately belongs to it, such as an LBI.


 


Non-competition covenants will generally be unenforceable, unless the employer can justify their use. As a matter of general law, once they leave employees are restricted from disclosing confidential information amounting to a trade secret. As with non-solicitation covenants, the restriction must be for a limited time. The geographical extent of the limitation must also be considered. Worldwide or covenants without limits have been held to be unenforceable, but more specific restrictions can be enforceable if considered reasonable in the circumstances.


 


In your case there was no geographical extent of the restriction and such a wide covenant is likely to be unenforceable. However, one potential issue is whether the pricing strategy you have used is something that can be considered a trade secret or confidential information belonging to that particular employer and whether you should not have used it for your own gain and especially to act in competition with them.

Ben Jones :

Please let me know if this has answered your query or if you need me to clarify anything else for you in relation to this?

Ben Jones :

I hope this has answered your query and would be grateful if you could please take a second to leave a positive rating - your question will not close and I can continue providing further advice if necessary. Thank you

Ben Jones, Solicitor
Satisfied Customers: 38308
Experience: Expert in UK Employment Law
Ben Jones and 3 other UK Employment Law Specialists are ready to help you

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