Are non-compete/restraint of trade clauses important to your business?
Probably submerged under a deluge of press about Brexit and the shenanigans of various politicians, it has barely hit the media that the government is currently consulting about removing the option of non-compete clauses. This will be in order to ‘make Britain the best place in Europe to innovate and start up a new business’. (See link below for full details).
At Jaluch, we have always had non-compete clauses in our contracts. Not that surprising given that I own and manage an HR business, but what might be surprising is that despite those clauses that are designed to protect my business, over the 20 years I have been in business I have lost many hundreds of thousands of pounds of business as a result of various employees (and associates too) walking off and starting their own business. And when they go they take my clients, my prospects, sometimes other staff and usually my documents and IP too.
However, the sheer cost of trying to pursue these employees and the immense distraction from the business in trying to do so, are the reasons why my usual opinion is that the only commercial option I have is to pick myself and my business up and seek to rebuild. Pursuing them is, in reality, a waste of valuable energy and seldom good commercial/financial sense.
Oh and I am so tempted to name names here but I won’t. They have done their damage to me and my business and they have stolen what is not theirs to steal. I’ve moved on and I am confident that Karma will take (or in at least one case, has already taken) good care of them.
The clients don’t care of course as my ex-employee or associate invariably offers them a better deal than my company was offering them and my ex-employees, in my view, simply don’t perceive that stealing clients and IP is theft. They don’t see themselves as criminals, as having stolen. They probably look in the mirror and tell themselves it was my fault for trusting them too much, or it was just sharp practice on their part and all they did was take advantage. Interestingly, in the same way, I find time after time that some HR Departments we deliver training for or give advice to, take and use our materials despite a very clear copyright at the bottom. I get the feeling that business theft, of whatever sort, is simply viewed as legitimate smart behaviour. Its not, though, its THEFT, making these people no better than the criminals who get caught then fined or sent to prison.
But perhaps you think the focus of this blog is too much on Jaluch. Well, it has broken my heart when year after year our clients have got stung too. Stolen from by employees who smugly set up in competition, they steal the business model, the look of the website, the supplier information, the clients and the prospects. In fact they steal whatever they can irrespective of the impact on the profitability of the company they are leaving, the sanity and wellbeing of the owner who has worked so hard to build it up, or their ex-colleagues whose jobs are at risk in a badly damaged business and with no regard to how important it is in business and life to be ever aware that what comes around goes around.
My views on the government’s consultation? It’s time to give employers far more (or much clearer) rights and to give SME employers financial and legal support in enforcing those rights if we can establish that a breach has occurred, not take away what little rights we have. If someone wants to set up in business, then that’s fine and no restraint of trade clauses will prevent an employee from starting a business that is not in competition with the one they are leaving, but the minute they do so, at the expense of another business through ‘legitimised’ theft, then that is the point at which it all becomes utterly pointless.
Any views, ideas or comments, please speak up! Equally, why not give the government your say. Link below!
Click here for more info.