How legal is this contract restriction clause?

[paddytheirishman]

Got a new contract for Jan to Mar 2010 and as well as including new reduced rate (don't get me started...), the agent has also added a restriction clause that basically forbids me from working for the client, its associated companies, clients clients, etc. for a period of 12 months following termination of this contract unless I work through them.
I don't intend to sign the contract with this clause in it, but I was wondering if any of you guys have come across this before, and does it break any EU workers rights such as free movement of labour within the EU?

[SueEllen]

1. Do a search on this board for restrictive clauses or similar.

2. As clauses vary you need to copy the clause leaving out names etc so we can judge whether it's likely to be enforceable. If you do this you also need to state what country's laws are applicable to the contract as UK laws differs from Irish law.

[paddytheirishman]

Thanks SueEllen,

Here is basic text:

The contractor(me) undertakes that they shall not enter into any agreement, whether directly or indirectly, to supply services of a similar nature to the client or a subsidiary or associated company of the client or to the client's clients, other than through the company(agent) for a period of 12 months following the termination of the agreement.

Irish law applies.

I'll have a trawl for other posts, my initial search didn't find anything specific but I'll check again.

[northernladuk]

Someone pointed something out on when responding to all these is it legal/binding type questions that made a good point but can't remember the exact wording.

'It is only legal when there is a lawer involved' or something like that. At the end of the day there could be a lot of posturing, moaning and shouting but it won't stand up until someone can be bothered to go to the expense of paying a lawer to make it stick.

Just depends how desperate you are to test this clause and how far you are willing to go i guess.

[SueEllen]

'It is only legal when there is a lawer involved' or something like that. At the end of the day there could be a lot of posturing, moaning and shouting but it won't stand up until someone can be bothered to go to the expense of paying a lawer to make it stick.

.

Only a court can decide whether it's legally binding.

Lawyers will argue that what their client says is enforceable and threaten to take it all the way to court but only a judge can state whether it actually is.

I only know of one business person who actually took a restrictive clause all the way to court and it stuck. This is because the clause was very well drafted and specific i.e. you cannot set up a similar type business within 10 miles of this business in the town of x for 12 months and you cannot approach existing clients for the same time period.

Normally a clause of 3 to 6 months is enough to stop people stealing clients etc but in this case due to both people being known in the community, 12 months was thought to be fairer.

Other people have just told the respective party to sod off, or the party implementing the clause realises it isn't reasonable and backs down. Some one man band agents write bad clauses like this and if you tell them that you are going to have a lawyer look at it they back down as they know even if you agree to the clause it cannot be enforced.

In the various UK courts (sorry no nothing about Irish law) anything worded like that would have a pen taken to it and any unreasonable parts would be struck out. This means what is left wouldn't make sense and so the entire clause couldn't be enforced.

[BolshieBastard]

Meanwhile, pcg sits on its fat lazy arse over these type of 'terms.'

[Not So Wise]

Meanwhile, pcg sits on its fat lazy arse over these type of 'terms.'

In this case it's Ireland, so unless they have expanded nothing to do with the PCG. And in reference to the UK it's already covered, opt in to the agency regs not out

@paddytheirishman, no idea in the particulars of Irish law but one thing is reasonably certain, contract restrictions have nothing to do "labour laws", client (or agency) is hiring your company, not you. Any labour laws would only be relevant any relationship between you and your own company

Hence why many people in these cases where they want to get around these clauses, "just set up a new company", but never seen such a senario hit the courts so no idea how that would work out (though fact it never hit the courts may be an indicator in it's self)

[paddytheirishman]

Thanks for the feedback guys. My solicitor is back in the office on Thursday so I'll get him to have a look also.
I believe the basic reason for my agent introducing this clause is that other agents are taking a smaller slice of the pie than them(which means the other contractors get more) and they are afraid of contractors moving to another agent, hence the addition of the clause.

[Not So Wise]

More likely they put the clause in because its pretty much industry standard practice. Even in the UK with the agency regulations that forbids these types of clauses (unless opted out) it is still pretty common for them to try

[TykeMerc]

More likely they put the clause in because its pretty much industry standard practice. Even in the UK with the agency regulations that forbids these types of clauses (unless opted out) it is still pretty common for them to try

Indeed and as usual the actual agent you speak to and their "legal" department will have no more idea about what's actually in the contract than they do about the Opt In/Out of the agency regulations.

Restrictive clauses are mostly about bluff and bluster, as has already been said unless a judge has ruled on the clause then it's meaningless.