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I have informed my staff of redundancy due to business closure because of my health issues.  I intend to work from home.  None of them want to purchase the business from me, although one employee has said that she intends to set up shop locally.  Obviously she wants to continue business as normal without paying for the goodwill contained in her client list. The radius clause in the Contract state clearly that this is not allowed for six months following the end of employment.  Does this still apply following redundancy.  She has worked with us for nearly seven years.

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By Taradaynes
21st Mar 2011 20:18

It is all dependant on the wording of your contracts! If the restrictive covenant just says 'after end of employment', then this would cover any eventuality. However, it may just specify certain circumstances, such as resignation or dismissal, in which case other circumstances such as redundancy would not be covered.

That said, many restrictive covenants are unenforceable in practice, either due to being unreasonable or just not worth the cost of pursuing a breach. But since you are closing the business anyway, there is no competition element, so this may restrict any claim you would have. You may want to try to just negotiate a goodwill compromise with your employee, such as a fixed-term small commission or one-off payment, & hope that they do the right thing morally!

Hope this helps,

Best wishes


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