Early years workers blocked from local job moves

The rights-based organisation Early Years Equality (EYE) has been approached by more than 130 nursery workers seeking advice about the issue in the past six months.

The problem is affecting nursery workers across the country employed by private nurseries, many in junior positions.

Some are having clauses written into their contracts preventing them from moving to another setting unless it is more than 25km away.

Chrissy Meleady, chief executive of EYE, which is also working to support employers, said the issue of 'restrictive covenants' (see box, right) in employment contracts was 'coming more to the fore in national employment debates across the early years sector'.

'We're calling on employers to review this and think fairly. Employees want the situation to be resolved amicably,' she said.

She said that some employers 'are well-known names and some are in several localities, or some are in two locations'.

She added, 'We know too, that in these days of austerity that there are pressures on employers in regard to matters of recruitment and market competition and that in some sections of the sector, restrictive covenants are being deployed as part of contractual arrangements.'

Jacqui Mann, managing director of HR4Nurseries, said that one of the reasons that there may have been a rise in restrictive clauses in contracts could be the result of the tightening up of the rules about GCSEs.

'Nurseries are finding it very, very difficult to recruit now,' she said. 'With the changes that the Government is making regarding qualifications, they're trying to get staff to stay.'

But she added, 'If the employee does go and work down the road and has a restrictive clause it is very hard for the employer to enforce it.'

Up to now such clauses have tended to be more at director level, rather than nursery managers or room leaders, she said.

'Some employers are adding that clause into contracts, but it's normally for senior staff - for example, operations directors or above.

'For a lower-level employee it restricts them from working in a certain area. It's not appropriate, because the likelihood is that if an employee challenged it a tribunal would say that it's not reasonable to stop them from doing the job they're trained to do.

'It isn't fair and we often recommend that employers don't put it in, and they shouldn't rely on being able to stand by that clause.'

But she said it was 'fair in some cases'. For example, restrictive clauses could potentially be used where there is sensitive information and product knowledge, and in cases where the employee 'could take a lot of staff with them, there will often be a clause not to poach staff'.

Ms Mann added, 'You would have to look at the actual role. It shouldn't be generic, but tailored to the role.'

Typically, staff could have a clause in their contract preventing them from moving to a competitor within a certain geographical radius for between six months and two years, although Ms Mann would only recommend six months.

She said restrictive covenants were 'quite old-fashioned' and that 'they were typically used in the hairdressing or beauty industries', where people might leave to set up rival salons. 'I don't see why it's really relevant to the nursery sector,' she said.

Andy Harris, a solicitor specialising in employment law from Sheffield Law Centre, told Nursery World that restrictive covenants were 'frighteners' and not generally enforceable.

'We deal with quite a few people who have these restrictive covenants and it's very rare that it's valid. It's highly unlikely that it would be enforced.'

He added, 'It's really an argument between restrictive covenants, which are for the employer, and what is likely to be a restraint of trade (see box, above). Restrictive covenants are very difficult to enforce because what you're saying is that someone can't work.'

However, nursery staff must not be 'openly soliciting' the nursery's clients or using confidential information.

Employers could not 'prevent them from going somewhere else using their skills and experience built up in their career. There's really nothing for employers to stop them.'

There is also nothing to stop parents from choosing to move their children to another nursery if an employee moves to another setting, because they are exercising their choice.

Nursery World showed some case study examples to Mr Harris and he did not believe that restrictive covenants would be enforceable in these cases, 'so long as they're moving on with experience gained in their career and not taking confidential information or client lists'.

CASE STUDIES: SARAH, KHALIDA AND MARC

Sarah, early years room leader

'I was employed as a room leader in a private nursery that has three nursery units in a city in Yorkshire.

'In my terms and conditions, there was a clause that said that if I left my employment then I was prohibited from working in any other early years setting within a boundary of 20 miles.

'On leaving my employment, it was made it clear to me that if I took up employment with any other nursery or childcare provider in the mapped-out area, which is massive really, then this would be seen that I had breached the terms of the contract. They said the clause was to stop ex-employees from passing on business information, or poaching customers.

'I was told in no uncertain terms that if I stepped into another setting, they would sue me and I would lose my home and everything I had worked for. What I have is not much, but I have worked hard for the little I have and as a lone parent I was terrified of this threat, because I had no money to challenge it.

'I found a job outside the area for the same salary, but it means that a large chunk of my money is spent now on having to pay travel costs.'

Khalida, Early Years Teacher in a private nursery in London

'There is a real fear held by early years workers, and more so now in these days of greater cuts, to speak out about the practice in early years of enforcing restrictive clauses on workers. Everywhere I have worked it's been that way. It's like a closed shop, it limits workers' chances to get employment and to have the freedom of working where the work is due to the extent of the radius that employers prescribe that an ex-employee cannot work in. Some say 2km, others go as far as saying 20-30km, knowing full well that as poorly paid workers in an underfunded sector, we have limited chances and choices as it is.

'The excuse of there being a chance of breaching company secrets is ludicrous. All we have is our childcare skills - we're not the chief executives of multinational banks or supermarket chains.

'The intimidation from some employers is abusive, with warnings of what will happen to us if we leave and get a job in their defined no-go area. It's wrong and it has to stop.'

Marc, assistant early years officer, Northumberland

'All of us in our nursery have a restrictive clause placed on us. We had to accept it or we wouldn't have got the jobs. Ours isn't the only nursery that does this; nearly all the private nurseries round us do it as well, so no matter which one you work in it's the same.

'The problem is that it stops you being able to be free to think about leaving your workplace because it means having to leave an area just to find work.'

• Names have been changed.

THE LAW: WHAT EXACTLY IS A RESTRICTIVE COVENANT?

The starting position is that any term in a contract which purports to restrict an individual's freedom to work for others, or to follow his trade or business, will be void and unenforceable in the courts unless it is reasonable by reference to the interests of the parties concerned and the public interest. This is known as the doctrine of restraint of trade. During employment, the balance of public interest favours the employer (implied duty of fidelity). Once employment has been terminated, the balance swings towards the employee.

A clause in a contract of employment that looks to restrict an employee's ability to work is known as a restrictive covenant and is enforceable if it protects the business's legitimate business interests and goes no further than is reasonably necessary to safeguard such interests.

Merely preventing competition is not in itself a legitimate interest.

Over the years, the courts have determined that the following may be 'legitimate business interests':

1. Trade connections (ie, the employer's relationship with customers, clients and suppliers)

2. Stability of the workforce (ie, the employer's interest in retaining employees)

3. Trade secrets and other confidential information (ie, chemical formulae, design features etc)

The most common types of restrictive covenants are: non-solicitation, non-dealing, non-poaching, non-disclosure and non-competition.

• Read the full factsheet on restrictive covenants from Sheffield Citizens Advice and Law Centre.