Hi there,
Sorry I needed to delete the contents due to some constraints
Engaging with Client Directly after Contract Finished
st11 on 03/02/2020 - 12:36
Last edited 04/02/2020 - 11:52
Last edited 04/02/2020 - 11:52
Comments
Thanks for the response, it is definitely written in contract, but our confusion is, isn't it nullified once the company itself terminated the contract. of course I understand it wold have been un-ethical and wrong if my friend had breached and terminated the contract, he willingly served the notice period, did all the right thing.
But in once sense, he is missing out on future employments despite of being terminated because of this clause.
Restraint of trade clauses are very fact dependent. But they're certainly possible and valid in some cases.
https://www.workplace-lawyers.com.au/employees/post-employme…
E. Has the employer repudiated the employment contract?
Generally, the employer’s ability to enforce the restraint will not depend on whether you have resigned from your employment or whether your employment has ended due to redundancy. The restraint will still be enforceable, even if your employment has ended due to redundancy. However, where your employment has been terminated summarily due to alleged misconduct, the situation may be different. If the employer has wrongfully terminated the employment agreement (for instance by summarily dismissing an employee for misconduct where that is not objectively justifiable), the employer may not be able to rely on the restraint provision because their actions may amount to repudiation of the contract.Other conduct by the employer may also amount to repudiation of the contract. For instance, if the employer unilaterally demotes an employee or arbitrarily changes their remuneration, this may amount to repudiatory conduct by the employer. The employer may not be able to rely on the restraint if the employee accepts the repudiation and resigns. IT IS IMPORTANT TO GET LEGAL ADVICE BEFORE RESIGNING IN THESE CIRCUMSTANCES.
Hi
Has the employer repudiated the employment contract? - Yes the employer has already repudiated the contract.
But isn't it a bit tilted in favor of employer then, for an employee whose employer has hundreds of client (yes there are companies with this kind of client base), if this employer terminates an employee or contractor then this person is deprived of opportunities at so many places and that too with no fault of his/her.
And in my friend's case, he was not even an employee, rather a contractor with this company whose contract was terminated midway.
Let me make this a little simpler for you.
If the contract was terminated lawfully, then the parties to it can continue to rely on it.
If the contract was wrongfully terminated, then the wrong-doer would not be able to rely on it. Specifically, if the party who terminated did so in a way that indicated it would no longer be bound by the contract, your 'friend' would also no longer be bound by it - including by the post-employment restraints.
All of that said, the underlying issue is whether the restraint is enforceable at all. In order for any restraint to be enforceable it must be reasonable - and it will only be reasonable if it goes no further than is required to protect the business' legitimate business interests.
If your 'friend' was made redundant that will likely be a significant factor for a judge. It may also be significant if your 'friend's' employment contract permits the clause to be waived by written agreement - and that consent was unreasonably withheld.
This is worth talking to a lawyer.Yes terminating the employment relationship does not necessarily terminate the contract. It is likely to have specific survival and/or termination clauses that address these points. As above, see a lawyer if they want to know if their actions violate the terms of the employment contract.
If I'm not mistaken, "your friend" was contracted through a labour hire (or similar arrangement) company to the actual employer. The actual employer terminated the arrangement in the first instance. The actual employer now wants to contract with "your friend" directly, cutting out the labour hire company.
Is this correct?
What you're driving at is a clause in the original arrangement that prevents the actual employer and worker getting together to cut out the labour hire company and therefore deprive them of their cut of the action.
Given that (it would appear) the labour hire company has become aware of the situation, you/"your friend" have a tricky situation. The labour hire company may wish to pursue "your friend" and the actual employer for lost income per what I've described above. Whether or not they actually do this depends on any number of intangibles including both the relative power balance that exists here and the state of the relationship between the labour hire company and the actual employer.
It will be important for "your friend" to discuss this situation with the actual employer and attempt to have them broker the situation. "Your friend" is likely dealing with the office junior who has little ability other than to restate what is in the contract. The employer may be able to deal with someone who can actually make a decision. Be aware that the employer may decide it's all too hard and run a mile.
All good points. However, if the employer gets involved with the labourhire contractor, there is a possibility that they may settle the matter with once-off placement fees, or decide to not do anything at all in the interest of maintaining their relationship with the employer.
Correct.
This happens at my company. We simply come to an agreement with the labour hire company to waive the contract clause and then we hire the new employee. If any money is involved, it never comes out of the employees' pocket.
Now after termination of contract, client once again wants to engage with my friend directly but the company (which originally terminated the contract)
What was the reason your friend was given for the termination of his contract by his company? The fact that the client terminated the contract with the company is completely separate.
And how long between the client terminating the contract with the company and the company terminating the contract with your friend?
Seek legal advice.
Does your friend still work for that employer? If not, it may be considered restraint from income and any clause in the employment contract may be difficult for them to enforce.
Get advice.
I was in a similar situation a few years before. Worked for labor hire agency and one site liked me very much they wanted to hire me directly.
When the labor hire realized that I am staying in one site for too long, they (apparently) had an argument with the site and they terminated their contracts.
Plot twist: I had told the agency that I am waiting to go for a 1 month holiday for a while then and been "waiting for a good moment". Since I can't go back to the old site, might as well have my holiday now (hehe!)
After "holidays" I told them that I want to quit and that was the end of it. They never bothered to check up on me or sue me.
Officially I was hired as a casual worker paid hourly so I guess they can't deny my desire to leave at any moment, and my contract with them had a clause that I can't work for someone with whom I worked before for 1 year but I think it would cost them more to sue me or something.I guess next question for you, is "your friend" officialy employed as a casual, part-timer or full-timer? And is he getting paid hourly?
Not a lawyer but it will depend on what is stipulated in your friends’ contract with the agency. From my experience 6 months is short, usually mine have been 1-2 years.