‘I’ve worked for 3 years for a Client through an
agency. Initially, the contract was
through my own company, in the UK .
Then it was through the Agency’s Dutch subsidiary as an employee – my
company was not involved. That contract
has ended and the Client now wants me to come back to the UK – but without the
agency. I’m concerned about
restrictions in the contracts.’
The
initial contract, through your company, ended early by mutual agreement, when
you moved to take up the contract in the Netherlands. That contract (between your company and the agency – you yourself
were not a party to it) contains a term under which your company undertakes
that neither you nor your company will supply your services (other than through
the agency) to the Client within one year of the end of that contract. If that contract had run its full term, it
would have ended 4 months ago – in which case the one-year period would still
be current.
However,
whilst nothing was expressly said about it, even though both parties to the
Dutch employment contract were different (on the agency’s side it was their
Dutch subsidiary, and on yours it was you personally), it is clear from all the
circumstances that there must have been agreement between the UK agency and
your own company that that first contract would end early – your company ceased
over 12 months ago to provide your services.
The restriction in that contract was worded in such a way as to run from
the end of that contract, and so the period covered by it has now also ended, and
you need not worry any more about that.
If that had been less than 12 months ago however, we would have had to
consider whether cooperating with the Client’s plan would also have put you in
breach of the term in that contract, and (if so) whether that term would have
been enforceable.
So
far as the second (employment) contract is concerned, it is in English but
states that it is governed by Dutch law, and that only the Dutch courts are to
deal with any matters arising under it.
The
restriction in that contract provides that your services will not, without the
(Dutch) agency’s consent, be made available to the Client during the 12 months
after the end of that contract. You are
within that 12 month period, and since this contract is between you and the
Dutch agency, it is you yourself (and not your UK company) who is at risk, in
the event of any breach of the term.
I
can tell you that in a temporary ‘contract of assignment’ under Dutch law
(worded in a particular way, and lasting no more than 6 months or 1000 hours –
and which your contract was NOT), such restrictions are not enforceable. However, in a contract of employment (which
yours was) such restrictions ARE capable of being enforceable. It is beyond my own sphere of expertise to
say whether or not the particular term in your contract is or is not in fact
enforceable. So the best we can do is
to assume that it may be, and examine what your situation will be if you
cooperate with the Client’s plans.
The
Client for the proposed new UK contract is the same company as the Client for
the Dutch contract. It therefore
follows that if your company were to enter a contract with the Client for the
provision of services to the Client, and if you yourself provide such services,
then you would appear to be placing yourself in breach of this restriction.
So
what are the risks? First, there is
always the risk that where you place yourself in a position which the other
party believes to be in breach of contract, then (whether they are right or
wrong in that belief) if at that time they still owe you money, they may
withhold it. I do not say that they are
entitled to do so – but as a simple fact of life, where someone feels they have
been wronged, then the first avenue they are likely to turn to is to exercise
self-help. And that means you risk them
hanging onto money they owe you, because they feel it will be some compensation
for your breach. In this case there is
actually a term in the contract which if valid) would appear to entitle them to
do so. I do not express a view on
whether or not that particular term here is enforceable (Dutch law would decide
this question) – but whether or not it is, if the Dutch agency find out what
you are planning before you have been fully paid for the work you did under your
contract through them, then that money is at risk.
Any
legal action they were to take would have to be taken in the Netherlands – but
if they were to take such action and succeed in getting an award of damages for
your breach, then there are procedures whereby they could register that
judgment in the UK courts and enforce it over here. My crystal ball does not tell me whether or not they in fact would
do so – but they could.
All
in all, to cooperate with the Client here would not be without personal risk. I would suggest that you think very
carefully before doing so – and (if you are willing to cooperate) then since
the desire to take your services direct appears to come from the Client, I
would suggest that you indicate that you are only willing to do so if the
Client gives you a full written guarantee to cover you against any losses you
may suffer as a result – whether that is income the Dutch agency withhold from
you, or damages you have to pay, or legal costs of protecting your position.
I
wonder if they will then be so keen on the plan…
27th
October 2000
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
[Return to Roger Sinclair's 'Welcome' page]
No liability is accepted for any inaccuracy in the information in these pages - see full disclaimer
© Roger Sinclair roger@egos.co.uk 2000 - All rights reserved - see full copyright details
The information on these pages is provided free and for information only, and is provided 'as is'. Whilst believed to be correct, it is in no way comprehensive. It is provided for your interest only and is not intended to be relied on as formal legal advice. The posting of information on these pages is not intended to create a lawyer-client relationship, and you should not act or rely on this information without seeking professional advice. No liability is accepted therefore for any errors, or for any losses that may be incurred if it is relied on.
You may read these pages on-line, and download them to read later, for
your own personal use.
This copyright notice must appear on every page that you print from here.
You must not redistribute these pages or any part of them in any form or medium
without first obtaining my consent.
You are welcome to set up links to this website from others.
[Return to Roger Sinclair's 'Welcome' page]