Getting sued

[guerrilla]

Hi,

My friend is getting sue by a company he previously worked for. The company has a reseller account for an online product as do quite a few people.

They put this clause in his employment contract:

"You will not place yourself in a position in which your interests conflict with that of the Company.

During the existence of this contract, you will not work for any other organisation (whether or not paid) without first obtaining the written consent of the Company."

After he left the company he set up his own re-seller account and went into competiton with them. The are now suing him for "illegal earnings".

To me this statement seems too vague to stand up in a court of law but I know the company personally and the director is tighter than a duck's arse so for him to spend out on solicitors he must think that he has a chance at getting some money.

Is anyone in a position to give some advice?

Thanks

[tkessex]

Most employment contracts state that an employee may not start their own business within a specified period of having left the company (and/or within a certain distance of the company's location). If no such clause exists in your friends contract, and he started his own operation after leaving the company detailed, then they haven't got a leg to stand on as far as I can see.

[eequals]

TK's point is correct. If the clause that you have quoted is the sole basis on which the ex employer is using as a basis for an action against your friend, they would not in all probability succeed.

Your friend should however be certain that there is nothing else in the small print which could provide a cause for action. He should therefore consult a solicitor about this.

While the law allows this sort of time/geographical clauses in contracts, it is often reluctant to find wholly in favour of the petitioner if at all possible. Such a sweeping clause as this would be regarded as onerous and therefore unenforceable in my view.

Joe

[AstarothSolutions]

You dont mention where you are?

I was speaking to a solicitor recently about a very similar thing - the general anti-competition clause - and their advice was that it doesnt need to be explicitly in the contract but normally is.

In this case however the person had taken clients with them so dont know personally if this impacts it or not.

They naturally should get legal advice on if they should defend and run the risk of full damages and legal costs or negotiate a lower settlement and just pay.

If they have legal expenses cover on any of their insurance policies it will almost cover giving advice on this type of thing but as they are the defendant then most likely not the defense costs.

[guerrilla]

Sorry I did not mention that he is in the UK (England). He started trading 2 months after he left the company although the company claims he was working for his own business while he was working for them.

I looked up on the government website about employment contracts and it only made mention that you could be sued in breach of contract for loss of earnings caused by the breach and that goes either way. If this was the case then I'm sure they would have a hard time proving he effected their earnings and the industry is large (although im sure they lost a few sales to him and probably still do).

Im sure there is a whole library of books written on employment law so I doubt the 1 page government website is the definitive resource.

All your comments are appreciated, please keep them coming.

[AstarothSolutions]

You are correct in that in the UK you can only ever sue for damages that equate to the actual loss sustained and not punitive damages (ie much more than the loss to "punish" the defendant for their actions - $1m for hot coffee against McDs etc). The one exception can be where there are no actual losses but the courts award a nominal amount (normally £1) as they feel the defendant was in the wrong even if it didnt result in material loss or pain/ suffering/ loss of amenities by the claimant.

My 101 training in law didnt cover employment so cannot really help with the details of the case and would advise that they take professional advice