Employment Contracts - Limits to Joining / Working Directly for Clients

• 

  barge-in hunter on 24/08/2023 - 11:23

  +2

  Non-compete and post-employment restrictions are incredibly hard to enforce, from an employer's perspective. Generally speaking, they probably won't bother unless it causes a significant material impact to their business.

  The flip side is that IT professional services can be a small world; so I would want to make sure that people & management I've worked closely with don't have a really strong reaction to it.

• 

  opportunieee on 24/08/2023 - 11:36

  +2

  Yes, I thought about the relationships angle. The reality is most of my work relationships are with the clients. Barring a few socially awkward catch ups, there is not much of a relationship with the consulting company. I dont think I am going to miss any potentially great relationships because most of those relationships are on the client side, and they definitely dont mind me working directly for them ! This is one of the major things motivating me to go ahead and apply.

• 

  AustriaBargain on 24/08/2023 - 11:55

  you should not directly approach / apply for jobs with the clients

  Makes sense for a consulting agency. Seems pretty generous imo if they will let you accept a job offered to you but just won't let you ask for it. Maybe you should drop hints with them that you want them to offer you a job? "Gee, if I worked here directly for you then I could probably get my own car park, haha", "when I work directly for an employer I bring in a box of donuts once per week, haha" stuff like that.

  Make sure you can accept a job offered to you from a current or former client though, or you risk trashing your own reputation.

  • 

    Mechz on 24/08/2023 - 12:01

    Is asking for a job the same as applying for an advertised role? I would think not.

    • 

      AustriaBargain on 24/08/2023 - 12:10

      I'm sure asking for a job falls under "approach". But if you say "haha" after asking then maybe it doesn't count because you could be joking, or…?

• 

  geekcohen on 24/08/2023 - 12:32

  +1

  This sounds a lot like a conflict of interest scenario. It can get messy. I know of a scenario where there are legal proceedings in place where Business A is taking an previous employee for starting his own gig which was in direct conflict. Pretty much competitors.

  • 

    opportunieee on 24/08/2023 - 13:33

    Without giving away info that you might not want out in public, are you able to give more insight into this situation ? Was this ca case where they are literally competing at contracts / projects level ? Di the previous employee start the competing business straight away after leaving or after x period ?

    In my case, I am not going to compete with them by starting a competing business, just working directly for the client.
    The only argument is about lost revenue, which could happen anyway if I leave to go to some other xyz company instead of the client.

    Is there any other angle where me joining the client can be seen as "competing" ?

    • 

      geekcohen on 24/08/2023 - 13:50

      +1

      Was this a case where they are literally competing at contracts / projects level ?

      Somewhat, yes.

      Did the previous employee start the competing business straight away after leaving or after x period ?

      It started during his employment and was running for some time before leaving.

      The only argument is about lost revenue, which could happen anyway if I leave to go to some other xyz company instead of the client.

      That's exactly right, it's about the lost revenue that is the issue. However, only if that client was a customer of your existing employer. If Apple was a client, but Microsoft wasn't, then you could go and work for Microsoft with no problem, but not Apple. For example.

      • 

        opportunieee on 24/08/2023 - 14:24

        In my case it is not even about lost revenue, it looks like the consulting firm will get to replace me with someone else, my current position is not being closed because of the other new role. So even if I took it, they can put someone else in that position and still continue to get the same revenues.

        Its just a matter of not trapping me down with the contract terms, by restricting me from directly working for the client.

        It started during his employment and was running for some time before leaving.

        Wow, that is aggressive behaviour on another level ? Seems extra-ordinary that someone managed to do this while still working there.

        • 

          geekcohen on 24/08/2023 - 14:27

          +1

          @opportunieee: Well just be open with the company and I am sure they will be okay. Better to be honest than beat around the bush!

          Wow, that is aggressive behaviour on another level ? Seems extra-ordinary that someone managed to do this while still working there.

          Oh yeah. Especially since it was in direct competition.

• 

  brad1-8tsi on 24/08/2023 - 12:38

  +2

  It would be helpful if you had the exact wording of your contract rather than "something along the lines of" because contracts are all about how the words are stitched together.

  In Australia, it's very hard to restrict an individual employee from seeking work elsewhere. What the company should be doing is protecting their IP.

  If you move to the client how will that negatively affect the consulting firm?

  Will they lose money because your contracted work has been brought in-house?

  Will you be doing the same role or will it be substantially different?

  Does the consulting company have any skeletons in the closet or commercial in confidence information that you know about that they wouldn't want the client to know about ?

  • 

    opportunieee on 24/08/2023 - 13:39

    Will they lose money because your contracted work has been brought in-house?

    No, it looks like the consulting firm will get to replace me with someone else, my current position i not being closed because of the new role.

    If you move to the client how will that negatively affect the consulting firm?

    Nothing other than them being annoyed at me (if they want to).

    Will you be doing the same role or will it be substantially different?

    I would be in a better position and work on multiple projects with the client team, including some involvement in the current project, though that is not going to be the primary role.

    commercial in confidence information that you know about
    Nope, quite literally too junior for this. Not in sales role either, so do not have financial info either.

    exact wording of your contract
    Bit hesitant to post it as is - not sure if the word / sentence sequence and format can easily identify them.

    • 

      brad1-8tsi on 25/08/2023 - 09:20

      +1

      exact wording of your contract
      Bit hesitant to post it as is - not sure if the word / sentence sequence and format can easily identify them.

      Have a talk to a solicitor that knows contract law.
      Also, you should have your employment contract reviewed before signing it. Don't be afraid to red-pen sentences or whole sections if they are unfair. Too many people only read their contract properly when it's all too late.

      When I was sub-contracting my contractor presented me with a 15 page page contract. I showed it to my neighbour who specialised in property law (so he wasn't an expert in employment). We edited it down to 5 pages. The contractor didn't bat an eyelid when I gave it back and agreed to all the changes.

• 

  happydude on 24/08/2023 - 12:57

  +1

  It's called a "Restraint of Trade" clause if you want to hit the google.

  The company can only enforce one to protect their legitimate interests, not to screw you and shackle you to the company. Courts weigh this up to determine if they are permitted.

  They weigh up your need to work with what the companies loss may be.

  To displace your right to work they need to show quite a lot of damage to enforce the provision in the contract. For example a top performing salesman that could take clients may allow a 3 month clause that does not allow that person to work in that industry after leaving.

  From memory, only NSW courts can vary the provision to make it fair. Everywhere else it is a binary decision - it's either fair and enforceable or it is not.

  If there only loss is a bit of income from you, then that will be one of two things. Not enforceable, or such a low amount of compensation that it would not be worth pursuing.

  • 

    opportunieee on 24/08/2023 - 13:42

    "Restraint of Trade" clause

    Thank you for that ! Hopefully helps me to narrow down searched specific to Australia.

    I do not have much of confidential info / financial info / influence any business decisions.
    Like I mentioned in the post, a junior IT guy doing almost all the work and interaction with clients. "Weekly / Monthly Catch-ups" are the only thing going on with the consulting co.

    • 

      GordonD on 24/08/2023 - 15:05

      +1

      Yes, as a lawyer would put it, "unreasonable agreements in restraint of trade are not enforceable" in this country.

      You have a right to practice your trade. To make a living as you best can. They can attempt to tie you down after you cease working for them by putting it in your contract. But unless it is reasonable, that is they can show a real likelihood of significant damage to their business, no court would enforce it.

      https://jfmlaw.com.au/deal-with-your-employer-employment-law….

• 

  tsunamisurfer on 24/08/2023 - 13:00

  +3

  I have been in situation before.

  Worked for a consulting company that successfully delivered a project to the client and the client asked if I wished to stay on directly.

  I chose the be open path and asked the consulting company if I may join them direct.

  It helped that my contract was coming to an end and the consulting company wanted to keep a good relationship with the client so they were happy to let me join.

  • 

    opportunieee on 24/08/2023 - 13:43

    So I assume you were on a contract and not "full time permanent" with the consulting co ?
    In my case I am "full time permanent" with the consulting co - though it might as well be just the contract. Dont know if there is anything different because of this

• 

  SydBoy on 24/08/2023 - 13:25

  +1

  This are standard term in majority of professional contract and every time i ask HR to remove it and if they can't remove then i can't join simple is that.. ! The reason to remove is also simple … at my age i have only 3 employer i can work in NSW so this type of restriction is something i can't afford to keep in any contract. most time this are generic terms and they remove it.

  what happens if you join your client ?

  if you are a CEO then sure your current employer will take you to the court .. lol 😂 unless you took their blessing prior to joining. i won't to tell my current employer before other company offer a role but it is only after they offer a role that i start talking your manager and let them know where you going as no point hiding if i am going to join client team then manager will know in week's time.. !

  at entry level most employer don't give a damm about it but if you have any pscho manager then god save you .. as this type of pscho manager will haunt you even if company don't care about it.

  • 

    opportunieee on 24/08/2023 - 14:13

    i have only 3 employer i can work in NSW

    Wow you must be in one of those specialty industries / jobs ? Are the pay better than average / compared to rest because its a niche ? What does it take to get into a niche job like ? Certifications / license involved ? Can someone without prior experience enter the field ?

    if you have any pscho manager

    This is my concern. Trying to figure out what would a bad case / scenario look like ..
    Hopefully doesnt come to that in case I proceed.

    It looks like the consulting firm will get to replace me with someone else, my current position is not being closed because of the new role. So they will continue to get the same revenues as they currently are with my position.

    • 

      SydBoy on 24/08/2023 - 14:47

      well, i am not in some sort of niche profession but my age restrict me to move around a lot plus i spend too much time in one type of employer in one industry nothing else… if i was in my 20's then i would had plenty of choices.. !

      coming back to your point… never do the mistake i have done in my work life by telling your manager you are looking for job outside or you are going to interview… but instead go for interview, if they select you and when they ask for reference and you have not other reference but your manager then talk to him about job you have been selected…. now at this point your manager will talk about your restriction then it is time to talk to HR and ask them to put everything in writing as to what will happen if you go?

      remember you are new in work so earlier you jump this bridge the better it is as if you stuck with this company for long under current restriction then it will be hard to exit as well in future … as you will be considered more senior person with access to more inside info… !

      if you have psycho manager then don't ever give their reference… i always give reference of my manager who i used to work in past (not the current one) …!

      your fall back plan in case you decide not to join you client for any reason is that your current employer restricted you .. lol 😂

• 

  stickingly on 24/08/2023 - 13:33

  +1

  What is your relationship like with your current employer?

  I have seen this happen several times before, the other way around as well (leaving client to join consulting form). If the relationship is good you can just be open and honest with your current employer and they may not stand in your way. If they are doing a lot of work for the client they probably wont want to burn that bridge and can come to some arrangement.

  • 

    opportunieee on 24/08/2023 - 14:19

    Current relationship in the consulting co is average. TBH, I would say that I do not know the people in the consulting co well at all.
    I dont have anything bad / issues, however i do not have a great one at a personal level where someone might be looking to help me out.

    I am worried that when it comes to matters of their own careers, they might not hesitate to throw me under the bus for their own political gain, especially in a consulting co with managers with a slightly sales oriented job.

    If they are doing a lot of work for the client they probably wont want to burn that bridge and can come to some arrangement.

    Thanks for this, this could be one reason for them to not be starting any dramas if there is no real need for one.

• 

  GordonD on 24/08/2023 - 15:45

  Experienced this the other way around.

  Companies supplying contractors for my employer were barred from poaching our staff. Then offering them back to work at a higher contract rate than their salary would have been as employees doing the same job.

• 

  apple2016 on 24/08/2023 - 16:49

  -1

  I want to know if these type of restrictions in employment contracts are really legal / enforceable ?

  Yes they are legal and enforceable.

  What potential actions (if any) can the consulting company take if I went ahead and applied anyways ?

  Usually demand compensation for loss of revenue etc.

  Can they stop me from taking a direct role in the client org ?

  No. but they can demand compensation and take you to court.

  If I go ahead an take a role with client, can they do anything to sabotage my future jobs applications ?

  No. unless you need their reference checks etc.

  I once was in the same position. but then I managed to convince the hiring managed and project manager of the client have a chat with consulting firm to issue a waiver that enabled me to join the client I was working for. It was not an easy process and it took about 12 months and multiple negotiations for it to work. Its not easy but not impossible either.All the best OP!

• 

  turbochris on 25/08/2023 - 10:35

  Generally not enforceable at all unless:

  1. You were in an executive position.
  2. You were put on gardening (paid) leave for the period of exclusion.
  3. The company has suffered actual significant financial loss.

  Check out reddit.com/r/auslegal it has been discussed ad nauseam over there.

• 

  yadupinto on 26/08/2023 - 21:04

  nothing is stopping you from applying for the role. The term of contact says you can't join the client.
  If you have good relationship with hiring manager then explain him your situation and ask him to sort out with your consulting company.
  normally consulting company won't push too hard the hiring manager's request since they are afraid of sabotaging future potential revenue.
  Thats the reason consulting companies create fear (and employment clause) in mind of employee to not to have such thought.
  I personally know so many cases were employee have joined the client. Saying that its not easy path. Most of thing depends on hiring manager. How hard he is willing to push back your employer.

• 

  lainey13 on 28/08/2023 - 11:46

  Half of my department's hires in the last few years have been picked up from vendors (under)delivering projects, so I don't think it will be an issue really. It happens a lot more than you think.