Recruiting with Non-Compete

[silvermoon137]

I'm currently in a tough situation and wanted to get some advice from everyone with regards to non-compete clauses.

My wife has received a job offer from a private equity fund (entry level, 2-3 years prior experience) which has a 6 month non-compete clause forbidding her to work in any fund that manages third party capital. That coupled with a 3 month notice period makes it a major concern for the two of us given the potential 9 month period between notice and moving the the next position.

1) Has anyone in the forum came across similar situations?
2) Are such clauses common / market standard?
3) Has anyone previously recruited for new positions while on non-compete? Key concern we have is not being able to even recruit given the amount of uncertainity this non-compete clause brings about.

[sundaymorningstaple]

I don't believe there is a 'market standard' aside from the fact that most do have some sort of Non-compete clause. The Financial services industry does see a lot of 3 month notice periods, however. If in doubt about a non-compete clause, take it to a legal beagle for their advice as to the upholdability of said clause. Lot's of employers insert these into their contracts but very few are actually enforceable (although they are getting smarter here and a number have been upheld in the last 10 years or so). You would want to check for duration, area enforceable, and if there is a legal basis for wanting it. Normally it is because of having proprietary information that is patented to the company or an exclusive process. A client list is, from what I understand, not grounds as any phone directory is also a client list. But I'm not a lawyer.

At the end of the day, you can also say no to the offer if you don't like it. It's your choice at the end of the day if the prospective employer has made you an offer.

[ecureilx]

My 2 cents.

For quite a few jobs here, it is common to see 6 months to 12 months anti competitive clauses. Asking to remove it won't work, as most HR (except you of course :p) have no clue how to even interpret the contract's anti compete terms. And that includes managerial posts in FnB trade - where it makes no sense- like, say an bar manager leaves, what else is he supposed to do if he is barred from working for competitors.

The issue is enforcement -almost all cases where there cases were taken to court by the ex-employers ended up in dismissal. From my end that's what I have seen. Though SMS may have seen the opposite (though some known guys ended up being unemployable due to the cases - that's a different topic anyway).

What gets the wins is when the employer can prove poaching of key clients. So when you leave, if you take your clients, then adding the anti competitive clause + client poaching = employer just added his odds of winning. And of course, if the employee jumps to work for a client or principal without prior approval from the current employers.

And again, in a lot of cases, employers have in fact added the exclusion of the anti compete clause, upon termination/resignation, upon request or otherwise, as larger companies know it is unfair to deprive somebody of his / her rice bowl by saying they can't work for competitors, especially if the industry is too small.

And almost all the retrenchment letters I have seen have the words saying the anti-competitive clauses are being waived.

And for candidates who went to clients or principals, again, I never saw any employer saying no. In fact, blessings were more than forthcoming. ! More like, good riddance

[x9200]

6 month non-compete clause in respect of possible client's "stealing" is still ok. Anything longer than this, may be not. First hand information from a lawyer.

[silvermoon137]

The role is specifically an investing role with a private equity firm and I think the key concern is that if basically kills all prospective of active mobility given most people at the same seniority level in the industry do not have non-competes, i.e. we're worried she might be in a less competitive position if she was presented with a new job opportunity given it will take her 9 month (vs 3 month for her peers) to be able to move to the new position.

[sundaymorningstaple]

Use your own judgement:

http://www.lawgazette.com.sg/2012-02/331.htm

Here's a thread with similar concerns...

http://forum.singaporeexpats.com/viewtopic.php?t=103741

[ecureilx]

Here's a thread with similar concerns...

http://forum.singaporeexpats.com/viewtopic.php?t=103741

Lovely quote ..

Screw that NC clause. It is abused by some SMEs who think they are hot shots. They put that clause in every employment contract, even to technicians and admin clerks. WTH!