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I have restrictive covenants in my employment contract and I need legal advice

Restrictive covenants are used by employers to protect their business interests. In certain industries, departing employees can pose a risk to their employers when they leave and join a competitor taking their skills and knowledge elsewhere and/or taking clients with them. This can be particularly damaging where an entire team moves to a competitor. Similarly, an employee who sets up a competing business after leaving employment could cause financial loss to his/her previous employer.

The Courts look to strike a balance in this area of the law between protecting an employers business and promoting a free market where employees are not prevented from earning a living after employment ends. Restrictive covenants need to be tightly drafted by employers to be enforceable. Restrictive covenants should give employers no more than adequate protection to protect their business interests.

If you are contemplating leaving your existing role to set up your own business or join a competitor it is important to seek advice regarding your restrictive covenants. You should proceed with caution where you have a restrictive covenant which prevents you from poaching customers or colleagues. If you breach your restrictive covenants or your previous employer suspects as much then you (and in some circumstances your new employer) could face the threat of an injunction.

It is important to seek advice at an early stage to minimise the risk of problems arising relating to your move.

Frequently Asked Questions

If you are prevented from earning a living by a restrictive covenant, it may be that the restrictive covenant in question is unenforceable. We can explore this with you. If your employment contract contains a non-compete restriction, this could prevent you from joining a competitor for a defined period following the termination of your employment. The length of the restriction is relevant to reasonableness and enforceability.

Restrictive covenants will only be enforceable if they protect a legitimate business interest and are viewed as reasonable. There can be disagreement between an employer and employee about this.

Overview

Vardags has decades of experience working on high value employment disputes, obtaining the very best results both in and out of the courts and tribunal for individuals and companies.

Our service is Director-led and specifically tailored to your circumstances and needs.

We specialise in handling complex and high-value employment issues and claims on behalf of, or involving, directors, shareholders, executives, senior management and employees. Many of our cases involve both High Court litigation and employment tribunals, for example, where there are issues of shareholder prejudice. We also have considerable experience in acting for clients involved in serious cases of sexual or other harassment; discrimination cases; and those involving whistle-blowing.

We support and guide employers, from SMEs to public companies, through business reorganisations, including transfer of undertakings, redundancies and mergers. Our aim is to keep our clients out of the courts, but where this is not possible, we provide representation at the High Court and employment tribunals.

TeAm

Frank Ryan, Director and Supervisor

Caroline Graham, Consultant

The team is also assisted by trainee solicitors, who normally spend three to six months in the employment department as part of their general training.

Key Stages

Where your employment matter becomes contentious, the scope of our work normally includes:

  1. Taking your detailed instructions; reviewing the documents; advising on the merits of your case (or of any case against the employer where we act for the employee); and the compensation that an employment tribunal is likely to award. Merits and compensation assessments are reviewed as the case develops. For example, if an employee, in seeking to mitigate his or her losses, finds new employment that produces a significant income, the compensation assessment would be reviewed to reduce the losses and value of a claim.
  2. Conducting initial correspondence with other parties, as well as entering into pre-claim conciliation (known as early conciliation) where this is considered appropriate to explore whether a settlement can be reached.
  3. Preparing a claim or response to a claim.
  4. Reviewing and advising on a claim and any responses received from other parties.
  5. Where appropriate, engaging in settlement negotiations and advising on the possibility of private mediation.
  6. Formulating a schedule of loss or counter-schedule of loss.
  7. Preparing for and attending any preliminary hearings, including private case management hearings where procedural directions for the conduct of the case are given by completing an agenda and list of issues.
  8. Compiling and reviewing the documentary evidence, exchanging lists of documents and examining the material produced by the other parties.
  9. Agreeing a joint bundle of documents for use at future hearings, whether related to liability or compensation.
  10. Drafting witness statements cross referenced to the documentation.
  11. Assessing the other parties’ witness statements and the effect these may have upon prospects or value.
  12. Devising a chronology and list of relevant individuals.
  13. Preparing and delivering a brief to Counsel.
  14. Liaising with Counsel in relation to witness statements and evidence.
  15. Attending the final hearing, and potentially also a hearing for the assessment of compensation.

 

Costs and Charges

Frank Ryan has successfully mediated many claims, resolving them through negotiation and agreement and. However, it is still possible that a matter may require at a final hearing. Normally, costs are not awarded to either party in employment tribunal proceedings, and therefore it is necessary for a careful assessment of the net returns a claimant may recover.

Subject to our standard terms and conditions of business, our legal fees are calculated by reference, among other things, to the total amount of time spent on a case. Charges are made for telephone calls, outgoing letters and emails, consideration of documentation addressing tactics and case planning, meetings and general preparation and pursuit of a claim.

Partners - £450 per hour.

Consultant - £450 per hour.

Assistant Solicitor - £275 per hour.

Trainee solicitors - £205-245 per hour.

The above legal fee charges will be subject to VAT at the current rate of 20% (where applicable) and also subject to modification on 1st April annually.

We will be able to provide an estimate of overall costs once we have received sufficient information. The amount of work involved in each case will depend on the facts and issues, as well as the level of support required by the client and the agreed strategy.

Where there are related civil proceedings, we would need to provide a separate quotation for this work since it would not be covered as part of the pricing estimate for our fees discussed above. An example where this could arise is if there is a petition alleging shareholder prejudice. The quotation would be given at the time so you are aware of all the relevant costs for the related matters. Illustrative Range of Fees

As a general guide, the overall costs of bringing or defending claims for wrongful or unfair dismissal (excluding the fees for barristers and any expert witnesses) are:

• A standard case of medium complexity £50,000 to £100,000 plus VAT.

• A complex case £100,000 to £150,000 plus VAT.

The overall costs of a case may be higher or lower than the above figures depending on a variety of factors, such as:

  1. The volume and complexity of the documentation to be considered.
  2. The intricacy of the history of the case.
  3. The number of witnesses to be called and whether they are legally represented.
  4. The client’s personal requirements or circumstances, for example, ill health.
  5. The level of opposition encountered and whether they are legally represented.
  6. The requirement for preliminary hearings.
  7. The length of hearing required.
  8. The seniority of the barrister chosen to present the case.

Cases can be further complicated in situations where:

  1. It is necessary to make or defend a variety of applications, for example, to gain access to documentary evidence;
  2. There are complex discrimination or whistle-blowing arguments;
  3. Proceedings are required in a different court or jurisdiction.

Disbursement and Barristers’ Fees

Disbursements are costs related to your matter that are payable to third parties. We handle the payment of the disbursements on your behalf to ensure a smoother process.

Employment tribunals do not currently have fees, although there are court fees if action has to be brought in the civil courts as well.

Barristers’ fees depend on the level of experience (or “call”) of the barrister appointed. We will seek to agree fees with you and the barrister’s clerk before they are incurred. However, please note that third party expenses (barristers’ fees and experts’ fees for independent medical evidence or material related to employment prospects or to engage in private or judicial mediation) must be covered by the client in advance of liability for the fees being incurred.

A junior barrister of between two and ten years’ call appearing at a preliminary hearing of up to two hours could charge fees in the range of £750 to £2,000 plus VAT.

A final hearing may take between three and ten days depending on the complexity of the issues and number of witnesses called. A senior barrister of 15 years’ call (a “senior junior”) at a three day final hearing could charge a brief fee for trial preparation and day one of the trial of £7,500 - £10,000, with additional refresher fees for days two and three of the trial of £2,500 to £3,000, again plus VAT. A senior barrister of 15 years’ call at a ten day final hearing could charge a brief fee for trial preparation and day one of the trial of £25,000 to £30,000, with additional refresher fees of £2,500 to £3,000 for subsequent days, again plus VAT.

Engaging a more junior counsel for a three day final hearing might charge a brief fee of £3,500 to £6,000 with additional refresher fees of £1,000 to £2,000 for subsequent days, again plus VAT. More junior counsel engaged for a ten day final hearing might charge a brief fee of £10,000 to £20,000, with additional refresher fees of £1,000 to £2,000 plus VAT for subsequent days.

If the instruction of an expert is required to provide evidence in any particular field(s), a fee would be payable for their time. Experts’ fees largely depend on the nature of their instruction and the facts of the case, it is therefore difficult to estimate these at the outset.

If it appears that mediation or adjudication may assist in resolving your matter, and both parties agree, a fee would be payable for the mediator’s / adjudicator’s time. These fees are normally split between both parties and are usually in the region of £1,000 - £1,500 plus VAT for half a day, and £2,000 - £3,500 plus VAT for a full day, however, they can be higher. You must also bear in mind that it is sometimes possible that a barrister may need to attend a mediation /adjudication in particularly complex cases or where your opponents are insisting on Counsel attending (although we frequently attend mediations without Counsel). Their fees could range from £1,000 up to £7,500 plus VAT, depending on their level of call.

VAT if applicable would be charged at the current rate of 20%.

In appropriate cases, and only when acting for a claimant, we may be prepared to consider acting on a Damages Based Agreement, details of which can be supplied by us in cases that we consider appropriate.

The Timescale of the Process

The length of time required to complete an employment claim depends on whether the matter is resolved by agreement or if it proceeds to a hearing. Negotiations for settlement can take place at any time and we advocate the use of private mediation in appropriate cases.

The time limit for bringing claims is normally three months from the date of the dismissal or other act that forms the basis of a claim, plus four to six weeks to allow for early conciliation. Early conciliation must be started within three months and involve any relevant potential respondent(s).

If a case is not settled through early conciliation or negotiation, the employment tribunal process is likely to take between 6 to 12 months to complete. This is only an estimate and we will of course be able to provide a more accurate timescale once the matter progresses and we have more information.

The timeframe in which your matter is concluded will also depend on the timeliness of responses from the employment tribunal, which can be affected by their capacity at any given time.

If proceedings are not necessary, many employment disputes can be resolved quickly, sometimes in a matter of a few weeks or a couple of months.

OUR TEAM

Frank Ryan

Civil Litigation Consultant Frank Ryan Vardags Civil Litigation Consultant
“Frank Ryan is a lawyer who thinks out of the box and delivers results, time and again, often with devastating effect. I would always want him on and by my side.” 
Toni Hilton, Dean of the Glasgow School for Business and Society

Is Vardags Right For You?

We offer a free consultation to qualifying individuals. Please call our confidential enquiry line on 020 7404 9390. Lines are staffed 24 hours.

When you contact us a member of our client relations team will take the full details of your situation, assess whether we can assist you, and if so, determine the best team for your case. 

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