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The Independent Automotive Aftermarket Federation

"Non compete" clauses


Date: 12-May-2016

Lawgistics have recently highlighted some issues around "non compete" clauses in contracts of employment.

In many employment contracts, the employer will insist on the need for restrictive covenants. These may include non dealing and non compete clauses, which will generally play a greater role post termination. 

Very briefly, these breakdown as follows:

•    non-competition covenants – restrict the employee from working in similar employment for a competitor;
•    non-solicitation covenants – prevent poaching of clients/customers/suppliers;
•    non-dealing covenant – prevents a former employee from dealing with former clients/customers/suppliers, regardless of who approached whom;
•    non-poaching covenant –prevents an employee poaching former colleagues. 

In practice, these are enforceable if they are reasonable such as, how far away is the competitor? If it’s on your door step then this is likely to be more enforceable then a company of the same nature 100 miles away.  

The Government is currently asking for a call of evidence regarding the non compete clause. At present the clauses are only enforceable in a court of law if the clause protects a legitimate interest and is reasonable. But, there are suggestions that they can cause issues with the hiring of new employees. Therefore, the government is asking for views from individuals and employers on whether this is the case.

To view the consultation and submit comments, CLICK HERE.



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