Contracting question - advice please!

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jonathan18

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Topic # 192251 3-Mar-2016 09:56

My wife's an employee for a govt agency; part of her work is fulfilling a contract the agency has with a private organisation (only a few hours a week).

She intends to leave the agency to go it solo; that private organisation is keen on retaining her services, and are looking at contracting her directly at the point their contract with the govt agency runs out.

Are there any legal impediments in the way of this happening?

There are no restraint of trade restrictions in my wife's employee agreement, so I can't see why there'd be an issue - I'd have thought it's that private organisation's choice as to who it does business with. As long as my wife's careful to avoid using her employer's IP etc, yadda yadda, I'd have thought she was ok.

Of course, there may be something I'm missing here, so would appreciate people's thoughts/knowledge/experience (especially those of a legal bent, eg would appreciate your thoughts, @dejadeadnz). I'm sure some will suggest we talk to an employment lawyer, which may indeed be something we need to do if there are any real risks here - it's just knowing for sure if this is case (as lawyers don't come cheap!).

Also, does she need to be careful with timing raising issues of conflict of interest? For example, can she sign a contract for the work if she's still employed at the govt agency, even if the contract start date is after she leaves?

Thanks for any advice.

keewee01

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Reply # 1505434 3-Mar-2016 10:54

I would highly recommend she talks to an employment laywer so as to cover her bases properly.

tripp

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Reply # 1505449 3-Mar-2016 11:22

keewee01:

I would highly recommend she talks to an employment laywer so as to cover her bases properly.

I agree

jmh

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Reply # 1505477 3-Mar-2016 12:41

It all depends on the contract she signed with her current employer - that's what a solicitor would want to look at anyway. Have a read through all documents that she has to see if there is any cool off period or restriction on working elsewhere. Many people have self employment alongside normal jobs, so I don't consider it unusual.

dejadeadnz

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Reply # 1505749 4-Mar-2016 03:04

jonathan18:

My wife's an employee for a govt agency; part of her work is fulfilling a contract the agency has with a private organisation (only a few hours a week).

She intends to leave the agency to go it solo; that private organisation is keen on retaining her services, and are looking at contracting her directly at the point their contract with the govt agency runs out.

Are there any legal impediments in the way of this happening?

There are no restraint of trade restrictions in my wife's employee agreement, so I can't see why there'd be an issue - I'd have thought it's that private organisation's choice as to who it does business with. As long as my wife's careful to avoid using her employer's IP etc, yadda yadda, I'd have thought she was ok.

Of course, there may be something I'm missing here, so would appreciate people's thoughts/knowledge/experience (especially those of a legal bent, eg would appreciate your thoughts, @dejadeadnz). I'm sure some will suggest we talk to an employment lawyer, which may indeed be something we need to do if there are any real risks here - it's just knowing for sure if this is case (as lawyers don't come cheap!).

Also, does she need to be careful with timing raising issues of conflict of interest? For example, can she sign a contract for the work if she's still employed at the govt agency, even if the contract start date is after she leaves?

Thanks for any advice.

An employee owes his/her employer an implied duty of good faith and fidelity. So one thing I'd generally rule out is any kind of work for the 3rd party organisation directly whilst your wife remains employed by the government agency. If you are properly advised by a lawyer or by her current work that they are okay with her signing a contract with the private enterprise, signing an agreement firming up her intention to provide services for them in the future whilst working for the government agency isn't necessarily an issue.

But ultimately it's impossible to give any specific, definitive advice without seeing your wife's employment contract and asking far too many (potentially very intrusive) questions. But before concluding too quickly that your wife's employment agreement is unlikely to present any issues, make sure your understanding of what is "IP" extends beyond things like trademarks, bespoke software, and so forth. Does your wife's future (potential) work involve applying, say, a generalised class of skills that people within a particular class of persons are likely to have (e.g. a qualified solicitor, who is a tax lawyer, moves from firm A to firm B to give clients of B advice on tax law, based largely on the solicitor's general legal knowledge, without ever relying on any know-how specifically owned/developed by firm A? If so, this is less likely to be problematic.

Does your wife understand the circumstances behind the private organisation's intention to end their contractual arrangement with the government agency? Is it an amicable ending of relationships? Does the government department know that it is going to end? A lot of "no" or negative answers here would suggest to me that your wife needs to be even more careful.

Good on you for raising issues regarding conflicts of interest but she needs to go further. IMO, the ideal scenario is to simply be upfront with her current work and see what they say. She may need to avoid doing any work relating to that enterprise whilst she remains employed by the government agency - think back to what I said about the implied duty of good faith and fidelity. When you say "government agency" - is it, for example, a Crown Research Institute, which are actually research BUSINESSES owned by the government. She really doesn't want to be accused of deliberately stinking the relationship up between the agency and the private enterprise, with a view to profiting for herself down to line. Allegations of this nature opens one up to being pursued in the Employment Relations Authority even after the end of the employment relationship for remedies like accounts of profit. UGLY STUFF.

All up - the risk and legal guy in me suggests treading carefully. Don't go el cheapo on advice. So what if she needs to spend a couple of grand just to be safe in the grand scheme of things.

jonathan18

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Reply # 1505833 4-Mar-2016 09:41

Thanks all for your responses, especially your detailed reply dejadeadnz.

As you have all pointed out, this is murky territory, with the specific details of the situation impacting on how things must play out.

My wife's employer is a Crown entity. She has discussed both her general intention to go independent and specifically the proposal to take on the contract with the private organisation, both with her manager and the contracts team. At this point they have been supportive of the former, and thus far seemingly understanding of the latter, but with the proviso they would be looking at any fishhooks. From our perspective, we'd rather know of and have a chance to sort out any such fishhooks sooner rather than later!

The employer will be in a difficult position to even fulfil the contract, should they retain it, once my wife leaves as she is now the sole advisor in the region, with no guarantees she'll be replaced. Given that, she may even be able to use this as a chance to contract back to the employer, as it may be able to get what they need sone in the area via such contracting without the overheads of premises etc.

Anyway, I'm also going to take a good look through all her documentation such as employment agreement, and we'll start to look for a suitable lawyer. Does that person need to be a specialist employment lawyer? Not sure how many there are of those in this small city!

Finally, will the work's code of conduct be something that is legally enforceable, should they end up relying on such secondary documentation? (Ie, relying on generalised clauses as opposed to dealing directly with such things as restraint of trade in the actual employment agreement.)

Thanks again.

jmh

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Reply # 1505919 4-Mar-2016 12:22

Don't know if it's relevant but it's something that crops up in my sector. If she is using materials like forms/documents/images that she created in hours that were paid for by an employer then the copyright belongs to them. She may still be able to use them with permission (best got in writing). If she created them in her own unpaid time, normally they are her own property, although you would need to make sure there was no discussion of ownership in her contract.

dejadeadnz

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Reply # 1505931 4-Mar-2016 12:57

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jonathan18: Thanks all for your responses, especially your detailed reply dejadeadnz.

As you have all pointed out, this is murky territory, with the specific details of the situation impacting on how things must play out.

My wife's employer is a Crown entity. She has discussed both her general intention to go independent and specifically the proposal to take on the contract with the private organisation, both with her manager and the contracts team. At this point they have been supportive of the former, and thus far seemingly understanding of the latter, but with the proviso they would be looking at any fishhooks. From our perspective, we'd rather know of and have a chance to sort out any such fishhooks sooner rather than later!

The employer will be in a difficult position to even fulfil the contract, should they retain it, once my wife leaves as she is now the sole advisor in the region, with no guarantees she'll be replaced. Given that, she may even be able to use this as a chance to contract back to the employer, as it may be able to get what they need sone in the area via such contracting without the overheads of premises etc.

IMO, your wife should continue the angle of discussing with the current employers further. Get things in writing and be fully transparent to them as to their response and ask for their response in writing. I think the ingredients are potentially there for mutual need/benefits in the future, so they should be amenable to laying their cards out. When you have such things in writing, even when you do decide to seek additional advice, things will be much simpler and cheaper.

Never let the business of choosing the right lawyer be determined by physical location. What your wife likely needs isn't Rolls Royce legal services but I wouldn't take this kind of advice from some general practitioner. Any competent lawyer can be engaged on this kind of matter regardless of distance. If she needs a range of recommendations, I am happy to provide some. Just PM me.

Generally speaking, things like Codes of Conduct can be incorporated as part of an employment agreement. But by its nature such codes tend to address expected behaviour of employees whilst they are working for the employer.