Employment Contract Question...

Scotty #

Hi, would it be legal for an employer to have a clause in an employment contract stating that an employee is not allowed to work in a similar line of work for 12 months after they leave the company? Or rather would the clause have any legal standing do you think?

Ty

Maximilian

It depends. The critical factors are the nature of the business, the time period concerned and the geographical area. If a restraint of trade clause is unreasonable, its possible that it may be struck down.

Notwithstanding the above, please note the charter. Don't seek legal advice here on your employment contract if that's what you looking for. If you have concerns, go see your solicitor. That's the only advice you should take from this.

Scotty #

As you have not completely shot down the idea as being ridiculous, I presume there is some legal standing for this type of clause. So... say Joe Bloggs takes up job as bricky, plumber, nurse, or whatever. His new employer can stipulate in his contract that if and when, and for whatever reason, the employment ends - Joe can not work in the same profession for a set amount of time!! But would an employment contract not become obsolete on the termination of the employment?




I'm not seeking legal advice... I don't have an employment contract and I have read the charter. I am seeking peoples opinion/knowledge/discussion of the above.

hunnymonster

I know as a research chemist (in my younger days!) I signed a couple of contracted that bound me not to work for a competitor for 5 years after leaving. I've no idea if it was legal but as I was still establishing a career path moving around different areas didn't bother me. For example if you worked in the formulation department of Coke in Atlanta and knew the secret recipe, it would be reasonable enough of them not to ask you to go work for Pepsi.

Maximilian

No, those clauses are enforceable alright. As to whether a given one is or not, there are no hard and fast rules. There is an awful lot of case law on the point however which give some guideance. It does depend on the circumstances though.

So hunnymonster mentioned one with a 5 year period. Now lets say that was 5 years throughout all of Ireland - well that would mean the person effectively could not work anywhere if he/she decided to leave. Something like that would undoubtedly be struck down.

Take the same example but this time around, the person can't work anywhere in Ireland but would get a massive severance package. Probably more likely to be enforceable.

Again, let say it was 5 years but it stipulated that the person couldn't work for a competitor within a half mile radius. Probably more enforceable. If the area in question was a small town, possibly less so.

Like I said, there are no absolute rules. The test is one of reasonableness and each case has been considered mainly on its own facts.

NoQuarter

Scotty # wrote: »

But would an employment contract not become obsolete on the termination of the employment?

It could different story if they terminated the employment rather that you leaving yourself as in Coleborne v Kearns.

Scotty #

Interesting. Thank you for your replies

Victor

Maximilian wrote: »

Take the same example but this time around, the person can't work anywhere in Ireland but would get a massive severance package. Probably more likely to be enforceable.

"Gardening leave" comes to mind. A chief executive might be put on a year's leave before the company will allow him work for a competitor. Compare golden handshake and golden handcuff.

Again, let say it was 5 years but it stipulated that the person couldn't work for a competitor within a half mile radius. Probably more enforceable. If the area in question was a small town, possibly less so.

This of course depends on the nature of the employment and the distibution of the particular industry. Forbidding a solicitor from working within a half mile radius of the Four Courts or an engineer within a half mile radius of Baggot Street would profoundly restrict the oppurtunities of employees.

For some personal services, e.g. hairdressing, a geographical boundary might be of upmost importance to an employer as there is a risk that the business will follow the employees, even without the employee touting for business.