My son has been with the same employer for the last 2/3 years. He has never been given a contract of employment. During the last few weeks he has been talking about setting up his own business doing the exact same work as he currently does,resulting in him being in direct competition with his current employer. A few days ago his employer gave him a contract of employment to sign, which he had to do straight away. He was a bit frightened / shy to request time to go over it, and unfortunately signed.Upon talking to me about it, we established that it contained a clause preventing him from setting up his own business in the same market place, in addition to becoming an employee of a competiter. Could you please advise if this is legal as it prevents him from continuing in the same business either employed or self employed ?

November 27, 2008 by Anonymous

It is not strictly the case that your son had no contract of employment until recently. There was an oral agreement which will have just contained basic provisions that your son would work in the agreed job and that he would be paid the agreed wage. Obviously his employers then wished to impose conditions such as that he could not set up in competition. They therefore presented him with a new written contract containing these conditions which he was under absolutely no obligation to accept but unfortunately agreed to sign. This will raise a presumption that he agreed to the restriction on competing although this presumption can be rebutted under certain circumstances. These could include duress, an absence of consideration to make the new contract binding, and possibly other factors.

There is much law concerning such terms in employment contract which are in effect a restraint on trade. Basically they are only enforceable if reasonable and cannot be wider than appropriate in the circumstances.

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