When starting your own business or moving to a new role within your field of expertise, it is common to want to take your existing client base with you. You know them, you can derive income from them, so of course it’s natural you want to maintain their custom. As employment lawyers, one of the most common questions we get asked is, when I start my business or change roles, can I take my clients with me?
Issues to consider
As lawyers, we look at the following in advising on the answer to that question:
- The terms of the restraint of trade clause – the terms of your existing employment contract usually contain a restraint of trade clause, which acts to prohibit you from taking customers or setting up in competition with your current employer. The extent to which that clause will be upheld if the matter comes before the Court is dependent on a number of variable factors, examined here. Examining the precise terms of such a clause is the first step in understanding the limitations to taking clients with you.
- The confidentiality obligations – similarly, it is commonplace for employment contracts to contain a confidentiality clause, whereby the employee agrees to keep certain information confidential and not use such information for any reason external to their employment, even after that employment is concluded. Usually, client contacts and details are included within the scope of such a clause.
- The common law duty of confidence – where one party (“the confidant”) acquires confidential information from or during their service with, or by virtue of their relationship with another (“the confider”), in circumstances importing a duty of confidence, the confidant is not ordinarily at liberty to divulge that information to a third party without the consent or against the wishes of the confider. For the purpose of application of this principal, client lists and contact details are considered “confidential information”. Accordingly, even without a restraint clause, or if those clauses are deemed of no effect, if you misuse (or take with you) the client lists obtained through your time with your employer, you could be liable for breach of confidence, and be ordered to pay damages.
So before you start contacting those clients and extending an invite to move with you, it is important you understand your contractual and legal obligations, and the potential ramifications of breach of these. An employment lawyer will be able to examine your documents and advise you on this process.