Employment Contracts - Is this reasonable

No

Highly unlikely ti be enforceable as well and you should be continuing on the same contract terms under tupe.

Restricted covenant clauses in employment contracts are very hard to enforce as it runs contrary to the principle of you being able to work. I used to work with HR lawyers and they said that only where there is intellectual property theft or taking business away from your old employer would there be a possible case to answer. 

Does TUPE apply though? Staff wouldn't be getting new contacts if TUPE applied would they? Thought you had to wait a period of time before changing...

So, if they're expecting you to NOT work in your chosen profession, should they make you redundant, what sort of payoff would you be getting?🤔

are they giving you 24months gardening leave / pilon then, thats ridiculous

No nothing!

Company i work for is getting aquired and part of the new deal is new contracts for the key staff,

OK so that should be a TUPE transfer (or if no change in employer, ie. no change in shareholder, then nothing changes).  BUT they can offer you a new contract that you would not be obliged to accept.  As you said "key staff" this might be the case - and its coming with some "nice" other up-sides?

mostly ok but one of the items is preventing you working for a similar company

have they defined "similar company".  Restricted covenant clauses are hard to enforce, but even harder if they are vague.  e.g. "Travel industry" - what you can't work for AirBnB, Expedia, BA, Scotrail, Uber... and would be nonsense, but "Corporate Travel Agents servicing the SME clients in the UK" would potentially be much more enforcable because thats probably much more about personal relationships.  Even then:

for 2 years if you leave/

would need to be an exceptional special role.  That might wash for a "VP of Sales" earning six figures + bonus, who has options for 5% of the business but its not going to wash with a marketing assistant on £25k pa.

get made redundant.

I've never heard of any restricted covenant in an employment contract being successfully enforced if the employer made them redundant.

Industry is travel so not exactly high risk

its not high risk?  I'm no expert but I'd have though it was an industry with lots of change and volatility?

i was expecting 6 months but 2 years? is that unresonable?

I think so, but the people putting it togther don’t seem to.

A long time ago I was advised that it might be better not to make a fuss about a ridiculous non-compete clause like that, because if shit hit the fan it would almost certainly be unenforcable, their lawyers would tell them that as soon as they asked you to stop, and if it did go to court the whole clause would be struck out.  Whereas trying to negotiate a more reasonable 6 months would potentially mean it was enforceable and you were bound by it.

I think it's wholly unreasonable to place restrictions on anyone being made redundant.  Even more so that they want to make it 2 years.

Certain parts of the travel industry have made redundancies in the last few months and I think you can expect more after 2022 possibly being a peak.

I'd get together and colectively tell them to have another look at that one.

Worked in HR 35 years  - you cannot stop people from working for competitors or anyone else. You can stop them from approaching customers -  for at best 3 to 6 months - so that clause is B***cks.

I’m sorry but we are having to make you redundant, but you are not allowed to use your skills to do a similar job in the industry for 2 years. Oh , and we aren’t paying you to not do so.
What sort of idiot came up with that?
Is it a test to see what level of fukwittery you would accept ?

I agree with the previous poster saying that the clause is so absurd I’d sign it without a qualm rather than argue for something reasonably sane that could be enforceable.

It's a contract and civil law applies.

For your previous employers to do anything they would have to prove a financial loss.

Which would be very difficult if not impossible.

Why are you getting new contracts? TUPE should apply. Are you getting any benefits?

I think it’s wholly unreasonable to place restrictions on anyone being made redundant.

If the employee receives enhanced compensation the Employer could argue this is conditional on contractual terms set out. Reality is no one outside executive or cutting edge IP generating level would ever be pursued. Only case I recollect was Anthony Levandowski when he bailed to Uber from Google.

I’d just sign it.

Had something similar when we were offered contract harmonisation at my place of work. Overall there were more positives than negatives so I signed it.

As others say it's not enforceable so I wouldn't worry about it.

Not an expert, but I thought it was confidentiality that was the real concern when moving on because the non competition is so hard to enforce?

Have a very good look at the contract.  There will be a reason you are being offered new contracts instead of TUPE and I bet its not in your favour.  You do not need a new contract in this situati8on - your old one continues under TUPE

Worked in HR 35 years  – you cannot stop people from working for competitors or anyone else. You can stop them from approaching customers –  for at best 3 to 6 months – so that clause is B***cks.

I had this in my job 2 years ago when I left.  2 clauses - cant approach customers for 6 months and cant work for any company which does similar.   I even got a written warning to my personal email post exit from my former company.

The latter was deemed unenforceable by legal council.

I’ve never heard of any restricted covenant in an employment contract being successfully enforced if the employer made them redundant.

My current employer has sent lawyers letters to people made redundant because they have got jobs at a competitor. I dont know if they are enforecable or not. I suspect in this case they are technically compromise agreements to get round redundancy restrictions on replacing them

Surely, by making you redundant, they (the employer) are ending your contract of employment (and all the clauses within said contract). So, I can't see how any such clause would be enforceable (outside of any period of PILON or gardening leave they pay you). 🤷‍♂️

IANAL

I'd tell them to ****rightorf, unless either

A- they write 2 years pay pay-off (on top of 'normal' redundancy) and pension and NI contributions into the contract in the event of me leaving for any reason - inc me leaving of my own choosing).

B - they give me huge 1-off sack of cash that is equivalent to thst

(For reference- the Co I was at for a long period suffered a reverse take over 3-4 years ago. Total and utter clusterfhook. I left after a year or so as I couldn't tolerate being in tje middle of that clusterdlook, precisely to go to a competitor, 400 yards up the Road. To do the same work, and mainly with the same long-established clients, (as they come to people they trust, not because of the name on any corporation nameplate) - and I went to tje new place exactly because the new employer wasn't run by clueless arseholes, unlike the reverse takeover place.

If the Co want to rule out you going to a competitor, that tells me there is a competitor to go to. So I'd be telling them to FRO, if I was on that situation (noting I wasn't over barrel to them in my situation - some folks are not so fortunate)

thanks everyone

Its being sold by share purchase so not sure TUPE applies in this case?

I am fairly sure it does.  TUC website offers good advice.  What does your union rep say? 😉

https://www.tuc.org.uk/workplace-guidance/basic-rights-and-contracts/transfer-undertakings-tupe

About 15 years ago the company I worked for (senior role) tried this.

Most folk just signed but a couple of us said "fine, if you're making my notice 2 years" - our notice was 6 months.

In the end they changed it to the notice period.

A lawyer I spoke to said even that wasn't really enforceable.

I wouldn't be sticking my head above the parapet on this one. TUPE gives you a degree of protection at the point of transfer but nothing beyond that. Being subject to a takeover means everyone is that little bit more vulnerable, no point getting your name known for fighting a clause which sounds entirely unenforceable / ridiculous.

Personally I wouldn't sign and just keep my old contract

Its being sold by share purchase so not sure TUPE applies in this case?

You are correct.  There is no need to go through the TUPE process because the employer does not change.

Lets say you work for ABC Ltd.  ABC Ltd is owned by Mr Smith.  Mr Smith sells his shares to XYZ Ltd.  You are still employed by ABC Ltd, so there is no transfer therefore no TUPE.  But that means your existing contract continues to apply.  There is no "need" for a new contract, or f this new term.  So as tj says:

Personally I wouldn’t sign and just keep my old contract

However it won't be uncommon for XYZ Ltd in this situation to not like the terms of the ABC contracts.  They can offer you a new contract, which might include some additional benefits.  e.g. better pay, more holidays, private medical, better pension, bonus, share options etc.  If you refuse to sign the new T&Cs they can quite legitimately not offer you those upsides; along with any promotion, future payrise etc.  So whilst TJ's answer is technically valid it might not be the best move depending on the circumstances.

Another possibility is that XYZ Ltd are a large(r) group and all their employees are employed by the group company and assigned to the subsidiaries.   They may want to do this with the ABC Ltd employees too - the correct process is to TUPE the employees to ABC Ltd, but again if there are enough upsides to being on the same contract as other ABC Ltd employees it may be better for you to have a new contract.  Whilst of course there are lots of malevolent employers and a degree of cynicism is healthy, they have bought the business for some reason.  Potentially that reason is the quality of its staff and they want to motivate, reward and retain you.  One, essentially unenforceable clause in the contracts wouldn't put me off if there were other factors that were improvements.

So whilst TJ’s answer is technically valid it might not be the best move depending on the circumstances.

Perfectly reasonable and which is why I think I said read the contract carefully

I am hugely cynical about this and IMO the new contracts are to get around legal provisions to protect staff either worse terms and conditions or a way to reduce redundancy payments or some such otherwise what is the point of new contracts?

I’ve never heard of any restricted covenant in an employment contract being successfully enforced if the employer made them redundant.

+1.

I am hugely cynical about this and IMO the new contracts are to get around legal provisions to protect staff either worse terms and conditions or a way to reduce redundancy payments or some such otherwise what is the point of new contracts?

Well the OP provides some possible insight:

part of the new deal is new contracts for the key staff, mostly ok but

Now we don't know what key staff means - eg. are they existing minority shareholders (who might be getting a chunk of cash as part of the deal!) or are they on short notice terms that leaves new owner exposed, or does the new owner just want to treat them better etc.  But it can be for efficiency/simplicity - everyone in the whole business has the same T&Cs.  My last employer had acquired a load of businesses some of which had themselves bought others so had 17 different contract variations.  Something as simple as saying "Here's the list of Bank Holidays for 2024" required understanding the nuance of each contract.  Some had contractual entitlement to private medical, some got it as a non-contractual benefit.  Sick pay arrangements were different.  The standard notice periods were different.  New employees would inevitably be hired on the "latest template" but that then made for conflicts - new hires getting things which were perceived as better than long standing staff; managers telling new hires what they thought the T&Cs were based on their own contract etc.

Oh, and I'll be amazed if this is to get round some enhanced redundancy rights - that sort of thing is almost never used in private sector contracts.

I'll be amazed if its not a cost cutting measure.  🙂

If they have new contracts with a new entity does that not mean that their employment clock is reset so even if you have ten years service under the old contract that would be disregarded for redundancy?  I do not know.

I am deeply cynical tho

I’ll be amazed if its not a cost cutting measure.  🙂

Well it could be - but that's not a great way to build a relationship with your new team, which often (but not always) were part of the reason you acquired the business.  It could well be a risk reduction measure - not uncommon for small businesses to be set up with everyone on 4 weeks notice, then to be bought and the buyer to think ****, everything I am about to buy could be gone in a month, so want to incentivise people to stay, increase notice periods etc.  If there's a key individual at the top who is "cashing out" then they may be particularly worried that employees are loyal to him/her rather than the business.

If they have new contracts with a new entity does that not mean that their employment clock is reset so even if you have ten years service under the old contract that would be disregarded for redundancy?  I do not know.

It certainly doesn't need to.  I'd say it would be unusual if it did.  Even within intra-group companies with new employers and T&Cs it would not be uncommon to agree to preserve the start date.  if the employer is a different legal entity, TUPE would apply, an start dates would be preserved. if its essentially fire and rehire they are into legal minefield territory, I like to think that anyone acquiring a company has some sort of legal advice and so is aware of that.

I am deeply cynical tho

Well its not a good sign that the new contract includes a ridiculous and unenforceable term.

eg. are they existing minority shareholders (who might be getting a chunk of cash as part of the deal!

thats me, just without the chunk of cash 🙁