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Help? Might be getting taken to court!

Ex employer threatening legal action for setting up on my own!

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Good afternoon,

I need some advice, I am in the process of setting up my own practice after leaving my previous employer around 8 months ago. 

I have since been sent several threatening emails saying that I am in breach of my contract of employment and that legal action will be taken?!

So my questions are:

1) Can I be sued for setting up my own practice when there is no clear detail in my contract regarding this?

2) Who counts as a potential client to my previous employer?

3) If I haven't contacted ex-clients, what am I actually doing wrong by setting up on my own?

4) If I am taken to court I will be representing my self as I cannot afford a solicitor, any advice if it goes that far?

Any help is much appreciated!

Replies (20)

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By Tim Vane
08th Jun 2019 14:01

First, you need legal advice, not accounting advice. How can you expect anybody to comment on the terms of your contract without seeing it.

As for not being able to afford legal advice, it is likely to be a lot more expensive if you don't get any. All it may require is a brief consultation and a letter to your former employer to make it all go away, so why not just do it?

An accountant who defends himself in court has a fool for a client.

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Hallerud at Easter
By DJKL
08th Jun 2019 14:43

I would ignore until I was formally notified that an action had been raised, barring you actually having walked off with a client database/firm property etc the threat seems pretty vague, so I would personally not bother consulting a solicitor unless there was actually some definite accusation .

However only you can know if anything you have done might have crossed the line re implied contract terms (given you state your previous employment contract is silent re restrictive covenants)

From experience of life those who are serious tend not to start a legal process by themselves firing e mails, those that are serious tend to get a solicitor to notify the issue and they do not use e mail and possibly, by acting themselves without advice, damage any case they may or may not have.

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Replying to DJKL:
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By johnhemming
08th Jun 2019 19:32

Quote:

I would ignore until I was formally notified that an action had been raised,


You should not ignore a letter of claim (which is the step before applying to court). Ignoring a letter of claim can give rise to a risk of having to pay some costs even if you win the case on the basis that the cliamant could argue that you would not respond.
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By paul.benny
08th Jun 2019 14:46

Mr Vane is right.

Before you start incurring fees, however, I note that to date, action has just been stroppy emails from your former employer.

Did you have a written contract of employment? What does this say (if anything) about any post-employment obligations? Is there any other agreement that would purport to stop you setting up your own practice?

As a general rule, restraint of trade clauses in employment contracts are difficult to draft effectively and difficult to enforce. I'm not a lawyer and it seems that your former employer hasn't engaged a lawyer. It sounds to me like sabre-rattling and he doesn't have a case.

You may be able to get some general guidance from acas on restraint of trade.

Does your PII insurer have a helpline?

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By Adam12345
08th Jun 2019 14:46

Restriction of trade clauses are often used, but they must be fair (in relation to geographical location and duration) and not anti-competitive so are often not worth the paper they are written on.

I would certainly get some legal advice.

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David Winch
By David Winch
08th Jun 2019 15:08

I would advise you to meet with a solicitor & get some advice. The solicitor may suggest that he writes to your former employer along the lines of "Go away & don't be silly". That might well bring matters to an end.
It would give your former employer the impression that you are not scared & are fully prepared & funded to fight him in court if necessary.
David

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By RobJohn1989
08th Jun 2019 15:16

Thank you all for you replies, they have made me feel much better!

I will wait to see if I receive anything from my former employers solicitor. If I do then I'll get in touch with a solicitor myself. From what I have read in my contract it is very vague regarding setting up my own business, it seems to be more aimed at preventing me from contacting ex clients.

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Replying to RobJohn1989:
Bramble
By Chris.Mann
08th Jun 2019 20:26

I went through similar “threats” some 37 years ago and, as Elton John might say “I’m still standing”!
Wait for the sling shots and, arrow shots, that’s if they get fired, before you lose your cool.
Threats are one thing, you can only deal with reality and, my friend, fingers crossed.

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By Glenn Martin
09th Jun 2019 12:20

Your old employer needs to worry about what he is doing and not what you are up.

I he feels that he is exposed to losing work to you he should deal with that and make sure the clients are.

Clients dont just join new firms they leave ones who are not supporting them.

These clauses are bull [***], unenforceable. As long as you haven't stolen any data don't worry about it, unless you get a letter from a lawyer.

All accountants have worked for someone at some point, they cannot erase your knowledge when you leave.

Your old boss should look at why clients would leave him as opposed to why they would join you.

I took a few jobs or a large practice near me, instead of looking into the problem as why their clients are leaving they go for the cheap option of trying to discredit the opposition, which rarely works, and just makes the opposition more hungry to win the work.

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Caroline
By accountantccole
10th Jun 2019 12:59

Get some legal advice
When I left a firm with a restrictive covenant, I took legal advice. Key points I took from that were:
* Even though my home was within a specified radius, they couldn't stop me working from home or seeking employment in my local town - unreasonable clause.
* covenant said I couldn't approach clients or staff but there was nothing that stopped me from shouting "here I am" on social media/networking etc.
*Clients have a right to choose who they work with
I wanted to leave on good terms so did it all above board, brought my clients and took files with me but it took the stress side away knowing where I stood.

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Caroline
By accountantccole
10th Jun 2019 13:00

PS - You know by replying your anonymity has gone!

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By DTB27
11th Jun 2019 10:36

With regards to not being able to afford legal advice, the first question I would ask you is: - Do you have legal cover on any insurance product?

If you do, a lot of these products actually cover more than just legal matters relating to your insurance. Give them a ring and check if you can get any advice from them as part of your cover.

The second question I would ask is, regardless of my previous point, can you afford not to take legal advice?

A firm I used to work for were very trigger happy with threats of taking ex-employees to court, including me when I left but was approached by an ex-client to deal with their affairs personally. I know of at least two other ex-employees who have been threatened with legal action and both of them took legal advice. The old company was effectively told to "stop playing silly buggers" and accept the fact that both the staff and the client's wanted to leave. Point to note, neither ex-employee approached the clients, the clients approached them direct and the ex-employees tried to do everything correctly by applying for professional clearance etc.

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By David Gordon FCCA
11th Jun 2019 11:54

I am regularly sadly surprised by the professional innocence of some correspondents.
yes you can be sued, it depends on the terms of your previous contract of employment, read it carefully especially as regards restriction of competition.
Almost all accountancy practices include something in their contracts of employment about ex-employees not poaching or approaching their clients.
The local employment tribunal. This may agree that the particular conditions are an excessive restriction of trade. Did you take any software, addresses, or telephone numbers with you?
This is theft.
If the employment tribunal will not help, you need a solicitor.
As soon as you receive any threat of legal action you ought to contact your Professional Indemnity insurer. Talk to them.
Only you know if you broke the terms of your contract.
IMPORTANT
Most of the sensible replies overlook the important fact that Professional Indemnity policies routinely contain a clause insisting the insured must contact them within at most two working days of receipt of any sort of threat of legal action. To my personal knowledge they strictly apply this rule. It does not matter how silly or vexatious or irrelevant, the matter seems, your PI insurer must be the first call. Your insurer has a vested interest in stopping nonsense before it starts.

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Replying to David Gordon FCCA:
By Glenn Martin
11th Jun 2019 12:22

The OP clearly states

1. There is no restrictive covenants in his contract.
2. He has not approached any former clients he used to deal with.

All he intends to do is set up in business as an accountant 8 month after working for one.

If he is only in the process of setting up he may not have any PI in place yet.

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By David Gordon FCCA
11th Jun 2019 11:54

I am regularly sadly surprised by the professional innocence of some correspondents.
yes you can be sued, it depends on the terms of your previous contract of employment, read it carefully especially as regards restriction of competition.
Almost all accountancy practices include something in their contracts of employment about ex-employees not poaching or approaching their clients.
The local employment tribunal. This may agree that the particular conditions are an excessive restriction of trade. Did you take any software, addresses, or telephone numbers with you?
This is theft.
If the employment tribunal will not help, you need a solicitor.
As soon as you receive any threat of legal action you ought to contact your Professional Indemnity insurer. Talk to them.
Only you know if you broke the terms of your contract.
IMPORTANT
Most of the sensible replies overlook the important fact that Professional Indemnity policies routinely contain a clause insisting the insured must contact them within at most two working days of receipt of any sort of threat of legal action. To my personal knowledge they strictly apply this rule. It does not matter how silly or vexatious or irrelevant, the matter seems, your PI insurer must be the first call. Your insurer has a vested interest in stopping nonsense before it starts.

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By tedbuck
11th Jun 2019 16:44

Did your former employer give you a contract of employment? If no - he/she was breaking the law and no contract means no restrictive clause. If yes what did it say? If no mention of restrictive covenant they are just being noisy and you can get a Solicitor to tell them to shut up.

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By tedbuck
11th Jun 2019 16:44

Did your former employer give you a contract of employment? If no - he/she was breaking the law and no contract means no restrictive clause. If yes what did it say? If no mention of restrictive covenant they are just being noisy and you can get a Solicitor to tell them to shut up.

Thanks (1)
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By djokhoo
11th Jun 2019 18:27

Good day,
Since you have left your employment 8 months ago, what have you been doing in that period of time?
Did you leave your employer in agreeable circumstances?
Have you at all been speaking to your previous employer's clients- how else and why would he be sending you treating letters? Perhaps some of his clients have left and are being serviced elsewhere.
It is not good behaviour to solicit your previous employer's client.
Legal advice is very good but I would like to add that-perhaps it would be to your benefit to also contact your association in writing and seek there advice before you get into unnecessary problems.
Follow good ethical behaviour; avoid unnecessary problems-it is not good for one's reputation; start your practice on a good footing; don't make promises to clients or potential clients that you can't keep; seeking advice from your association is a definite cheaper option and less time comsuming; good luck to you; have a good one.

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By JD
11th Jun 2019 20:44

You could invite your former employer to be specific as to which contract clauses you are in breach of and which clients. Make sure response is sent ''without prejudice''

When he comes up with nothing, you know you are in the clear.

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Pile of Stones
By Beach Accountancy
16th Jun 2019 10:52

A lot of solicitors will provide the first meeting for free so you can see if your old employer has a case. I did this when I wanted some advice on being made compulsorily redundant.

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