i work for a very small consultancy (5 people) and am about to sign a new contract. a former employee left the company and went to a client which pissed the principal off something fierce so he had some proper contracts drawn up. a couple of things bother me so I’d love to hear and get any feedback.
nasty clause 1:
yata, yata, yata… “it says that upon termination of the contract the employee for a period of 4 months should not be directly or indirectly involved in any competing activity in any capacity and that one should ask for written consent.”
considering that as a designer, most likely my next job will be at another consultancy then in my mind this is a bit unreasonable to ask, no? written consent? right, this guy takes employees leaving rather personally. today Dr. Jekyll, tomorrow he could turn into Mr. Hyde and say no and leave me liable because i signed on the dotted line.
in brief, for 12 months after termination of contract shall not try to solicit business from any clients that have come on board in the last 24 months prior to leaving.
how standard is that?
the rest seems pretty standard stuff.
would love to hear any thoughts on the subject. Thanks!
The second point about not approaching clients for a certain period is pretty standard and I really don’t see a problem with that. Many companies do this to prevent their employees from leaving and offering clients the same services for a discount or for when employees go to work for the client removing the need for external services.
The first point is VERY broad and I would ask for clarification and an addendum to the contract. If they mean that if you quit, you are not allowed to work for any competing company or to work for yourself in the same market and field for 4 months, I don’t find that reasonable at all. They cannot prevent you from earning a living should your relationship with them become strained in any way.
I would also ask them what their position is on freelance work that you take on while working for them. Some companies get very touchy about this. One of my previous employers found out that I did freelance web and video work and pretty much demanded that I offer the same services through them. Without asking me they started telling clients that we “now do web design” and tried to use my freelance services like a new revenue stream. It was one of the reason why I left the company.
Get this resolved, in writing, get a signed copy for yourself, have HR keep a signed version. You are not a slave to them.
I’ve seen this kind of clause a couple of times, although on both occasions it was for large companies with an in-house design team, rather than a consultancy. Although it can seem quite restrictive, there is an important factor which your employer is obviously not telling you - whilst he would have the right to prevent you working for a competitor, he must compensate you during that period, i.e. pay the equivalent of your new salary for the 4 months in question. This at least is the case in the UK (it’s often referred to as gardening leave, because you get paid whilst working in the garden). And what it means in reality is 99 times out of a 100 the previous employer doesn’t exercise the right, because it’s not worth it to them financially. I only know of one occasion where this happened with a company I was working for; they hired a marketing director from a direct competitor, just as that competitor was about to launch a new sub-brand, and the competitor stopped the new hire from taking the position for six months.
The part about written consent also gives it away a bit - sounds like he just wants to make sure you’re not going to give away any company or client secrets.
The first clause is very weird. Any time a statement like that is made, clear boundaries need to be defined.
Depending on the State you are working in, clauses like this might or might not be enforcable. This is the first thing I would check out. If the clause is actually unenforcable, than there is no reason to get him riled up when he is holding all the cards.
On this subject, bringing up freelance work is a BAD idea. Not until he gets to know you and he has something to lose. Right now, it’s just as easy for him to hire someone else…Your boss doesn’t want to know you have your head wrapped around any business besides his.
thanks for all the replies. i just wanted to hear a few opinions. i’ve been with this company for almost 2 years now and i have a decent relationship with the man in charge. we had a talk and he is looking into removing it completely. we’ll see what happens.
Both clauses are standard and actually fairly benign. I work as a design manager for an internal corporate team and my non-compete (and that of my fellow designers) prevents me from working for any company or consultancy in our product space for a year. I can work in the same industry (medical) or for a consultancy, but must recuse myself from any projects that pertain to my current domain.
4 months is actually a very reasonable time period.
Also, in California, non-competes are illegal and may be in your state as well.
I remember seeing something when I lived in the UK that clause one would never stand up in court because it stops you from earning a living. I would ask them on it, otherwise don’t worry, it would never stop you from working if you do leave, any decent lawyer can argue that point for you.
I agree with the previous assessments, however wrt to this response I think it’s worth distinguishing between circumstances.
I’ve also seen corporate documents that limit designer options as indicated in this post. But there’s a significant difference between the “product space” of a manufacturer and “any competing activity in any capacity” for a design firm employee (i.e. industrial design).