NSW Breach of Contractor Contract?

[Anam]

Hi,

I am a IT developer contractor with a company X and providing service to company Y. Company Y has more than one service providers including the company (X) which I am a 'contractor' of.

Now company 'Y' decided to outsource all its services to company 'Z' (one of the existing service provider) and decides to not renew any contracts with company 'X' after 30th March 2017. Hence my legal contract will end on 30th March with Company X.

Being a contractor of company 'X'; I would be jobless after current month since contracts are not getting renewed. Company 'Z' approached me to continue providing services to company Y under their permanent role. If I accept company Z 's offer , can the company 'X' sue me legally if my contract letter states as below?

How am I expected to keep supporting my financial need when I need to search for new job just because of this contract terms n condition?


My contract letter with company 'X' states as below:

'By the End User or Related Body Corporate of the End User with a view to the Service Provider working for the End User at any time prior to the expiry of six months after the termination or expiration of this Agreement. The Service Provider must not and must procure that any Nominated Person does not, without company 'X' prior written consent, prior to the expiry of six months after the termination or expiration of this Agreement:

(a) enter into (or approach with a view to entering into) a similar contract of engagement or for services directly or indirectly, or employment with the End User or End User Group Company; or

(b) enter into (or approach with a view to entering into) a similar contract of engagement or for any services, or employment directly or indirectly with any client, customer or entity introduced to the Service Provider by the End User or End User Group Company; or

(c) induce to leave or cease performing service(s) for company 'X', any Service Provider or employee of company 'X' with which or whom the Service Provider or Nominated Person had material contact in the course of performing an Assignment at any time in the 12 months prior to such termination or expiry; or

(d) induce (or seek to induce) the End User to engage the services of any other person in competition with company 'X' or provide Candidates to the End User with a view to such Candidates providing services to the End User other than through company 'X'.

Really appreciate if any legal opinions is given sooner.

Thank you!

 

[Lance]

Hi Anam,

It sounds like company x has had their people poached by clients in the past. I'm not sure how strong restraint clauses of this type are.

My understanding is that a breach of a restraint clause leaves you open, but a couple of times I've seen Lawyers on here say that specific restraint clauses aren't enforceable.

 

[Rod]

There are two possible causes of action depending on whether your contract is under contract law or employment law. Hard to tell from the facts which it is.

Contract Law: Company X has already lost the contract with company Y. Unless they have other work for you they would have a hard time proving any damages and if it went to court they would only be awarded nominal damages (ie you are better off working at company Y and paying nominal damages IF they happen).

Employment Law: Likely to be unenforceable unless there is something very unique about the work you are doing for company X that may have an adverse impact on them or your remuneration is high enough to justify you not working for 6 months. These two situations are rare.

 

[Anam]

Thanks a lot Rod

 

[Matthew Lynch]

Did you approach Company Y before their contract with Co. X ended?