Sometimes your job can curtail your freedom when you decide to leave.
This can happen when you agreed to a restraint of trade clause in your employment agreement.
Restraint of trade clauses can take various forms. One common restriction prohibits you from soliciting your former employer’s clients or customers for a period of time after you quit your job.
But what does “soliciting” mean? What does that really prevent you from doing?
SOLICITING IS MORE THAN MERE CONTACT
Bumping into a former client you dealt with at your previous job in the supermarket is unlikely to amount to solicitation.
In fact, you may socialise with the former client at a BBQ or after-work drinks in a non-work related way. This does not of itself prove that you have solicited them. Your connection with that person may be entirely non-work related – they may be friends you went to university with or a blood relation.
You can’t be blamed for knowing someone as a friend or family member. And so mere contact would not be enough to prove that you have solicited them.
You must do something that goes beyond friendly pleasantries.
AN INVITATION TO DO THEIR WORK
Solicitation assumes that you make contact with the former client for a purpose – namely, to invite them to hire you or your new employer.
That invitation might be express (“Please send work my way at my new address!”) or implicit (“Here’s my business card for where I’m working now”).
Why is making an invitation like this a problem?
Well, you may have developed relationships with these clients by virtue of having a client-facing role in your former job.
The law will somtimes see it as fair that you be stopped from taking advantage of those relationships against your employer’s interests for a time if you have agreed to do so.
WHEN THE CLIENT APPROACHES YOU
What if the client hunts you down and approaches you to do their work for them without you seeking them out?
That is a fair defence to a claim of solicitation. Provided you have not invited them to approach you for that work, you would be free to do work for those former clients.
Nevertheless, a fair question to ask is, how did those former clients get your contact details? If you had a hand in getting your new contact details to them, then that might amount to indirect solicitation.
HOW EMPLOYERS AVOID THE GREY AREAS
Sometimes it is just too hard for an employer to prove that you crossed the line and invited the former client to take up your offer of work.
To make it easier for themselves, they might include other types of restraint clauses in your employment agreement that refer not just to solicitation, but to other prohibited activities.
These are clauses that prevent you from dealing with a former client at all – regardless of who approaches who first. If you cannot do a business deal with a former client, it won’t matter whether you solicited them or they approached you first.
This type of clause stops you from carrying out work for former clients. It does not prevent you from dealing with them, provided that you do not actually do any work for those clients. Again, this bypasses the problems related to proving you solicited the client.
Then there is the “nuclear option” – which is to include a clause stopping you from working for a competitor or setting up in competition to your former employer.
The issue with this type of clause is that it can be more difficult to enforce because the law tends to steer away from upholding agreements that are simply anti-competitive.
But provided your employer can show that by working for a competitor there is a genuine risk that they will lose business, perhaps because of your close ties with your former employer’s clients, then the Employment Relations Authority or the courts may be minded to keep you to your agreement.
All of what I have said above assumes that you have agreed to a particular non-solicitation restraint clause in your employment agreement with your former employer.
It always pays to really understand what you are signing up to when you enter into an employment agreement with a new employer. Employees are often so overjoyed to be offered a job that they don’t realise they are promising to bind themselves in certain ways when the job ends.
A clause preventing you from soliciting former clients is just one type of restriction that can bind you. And as we have seen, it is one of the more narrow restrictions.
Have you checked your agreement lately to see if you are bound by a non-solicitation clause?