# curious as to the validity of non-compete clauses in an emplyment contract.



## fu manchu (4 Jun 2011)

I'm curious as to the validity of non-compete clauses in an emplyment contract. Can such clauses be enforced regardless of the circumstance. For instance, if a company is on the verge of going under (or appears to be) is an employee entitled to disregard such a clause or can the employer enforce the non compete clause?

Any advice or guidance is much appreciated.


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## csirl (7 Jun 2011)

Check the employment contract as there is a good chance that there is an oversight that will make the clause meaningless (have come across it myself on numerous occasions).

If the resignation/termination part of the employment contract says something to the effect of "....this employment contract can be cancelled by either the employer or employee giving 1 months written notice....etc. etc" Then the clause will be meaningless once the employee resigns. The reason being that when the employment contract (or any contract) is completely cancelled, ALL clauses are cancelled including any non-compete ones. 

When resigning, the employee should use the phrase (or something similar, try to mirror contract language)..."I wish to give the required one months notice to terminate my employment contract...etc.etc" in their written resignation so that there is no ambiguity.

Did this myself in the past when working for one of the largest multinationals in the country - and in spite of having a large experienced well paid HR department & legal department who were supposed to be drafting watertight contracts, the company was totally unaware of this and never realised what I and other employees were doing by resigning this way.


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## Jim2007 (7 Jun 2011)

csirl said:


> If the resignation/termination part of the employment contract says something to the effect of "....this employment contract can be cancelled by either the employer or employee giving 1 months written notice....etc. etc" Then the clause will be meaningless once the employee resigns. The reason being that when the employment contract (or any contract) is completely cancelled, ALL clauses are cancelled including any non-compete ones.



Have you got case law to back this up?  And I have my doubts about it since it would also mean that an employer could walk away from his obligations just as easily..... 

Jim.


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## Sunny (8 Jun 2011)

A non-compete clause is perfectly legal and enforceable under Irish Law.  Whether the courts will enforce it depends on the circumstancs of each case.


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## csirl (8 Jun 2011)

Jim2007 said:


> Have you got case law to back this up? And I have my doubts about it since it would also mean that an employer could walk away from his obligations just as easily.....
> 
> Jim.


 
Employer has no obligations once an employee resigns i.e. does not pay salary.

Not aware of any case law, but can confirm that I did this myself and it worked. Its quite clear cut - an employer has no hold over you once you've cancelled your employment contract, are not working there and are not receiving a salary. We dont have slavery in Ireland 

In short, its impossible for someone to enforce contractual conditions where no contract exists.


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## Sunny (8 Jun 2011)

csirl said:


> Employer has no obligations once an employee resigns i.e. does not pay salary.
> 
> Not aware of any case law, but can confirm that I did this myself and it worked. Its quite clear cut - an employer has no hold over you once you've cancelled your employment contract, are not working there and are not receiving a salary. We dont have slavery in Ireland
> 
> In short, its impossible for someone to enforce contractual conditions where no contract exists.


 
That's not true. The clause is enforceable as long as it is reasonable. Just because your contract with your employer ends on the Thursday does not give to right to start using customer lists or other Intellectual Property from your old employer on the Friday if your contract prohibited you from doing so. 
I can had clauses in my contracts prohibiting me from contacting my clients when I resign for a period of 1 month. It is very enforceable and I know of at least one case where it was enforced it cost the ex employee and the new employer heavily. It was in London but the law is the same.
Your company might have decided it wasn't worth the bother of enforcing the clause. Doesn't mean they couldn't have tried.


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## csirl (8 Jun 2011)

Sunny said:


> That's not true. The clause is enforceable as long as it is reasonable. Just because your contract with your employer ends on the Thursday does not give to right to start using customer lists or other Intellectual Property from your old employer on the Friday if your contract prohibited you from doing so.
> I can had clauses in my contracts prohibiting me from contacting my clients when I resign for a period of 1 month. It is very enforceable and I know of at least one case where it was enforced it cost the ex employee and the new employer heavily. It was in London but the law is the same.
> Your company might have decided it wasn't worth the bother of enforcing the clause. Doesn't mean they couldn't have tried.


 
Yes clause is enforceable if the contract is drafted correctly. A correctly drafted contract would specify that the employee is bound by the particular restrictions for a period of time post termination of the employment aspects of the employee contract and that employment should be terminated in a particular way that preserves the contractual restriction. Unfortunately, in my experience, many companies have sloppy drafting. A court is not going to, and by law cannot, enforce a contract unless it is absolutely clear that a contract still exists between the parties. It would be impossible to enforce a contract, such as the one I mention in previous posts, whereby there is a specific clause stating that the contract is completely terminated i.e. a postive statement to that effect. I would assume that your London employer had the legals done correctly. My current employment contract has some restrictions and they are correctly drafted and enforceable.


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