Restrictive covenants

An employer was not able to show that their former clients had moved to a former employee’s new business due to any request, persuasion or encouragement on the part of those former employees. Solicitation, in breach of such a restrictive covenant, could not be inferred from the fact that a ‘tidal wave’ of clients had moved to the former employee’s business, even though that might well look suspicious.

An employer failed to get an injunction preventing an ex-employee from soliciting its customers as the restricted period of 12 months was longer than was necessary to protect its legitimate business interests.

A worked for WRN as Marketing and Rebroadcasting Manager and then later as Head of Sales and Marketing. When he resigned he took with him 50-80 business cards and e-mailed his contacts telling them that he was moving to a company working in a ‘broadly similar area’. WRN applied for an injunction forcing him to comply with various restrictive covenants in his contract.

Norbrook sought to enforce restrictive covenants in the contract of Adair, a former sales manager. The first of these was a non-competition restriction preventing her from working for a period of 1 year after termination in a business whose products competed with those of Norbrook and with which she was concerned in the last 5 years of her employment.

This case shows the increased willingness of the courts to enforce post-termination restrictive covenants. The Court of Appeal has held that a 12-month, non-dealing restriction was reasonable because of the nature of the business (financial services) and the seniority of the employee involved.

The Court of Appeal reviewed case law on restrictive covenants and upheld a 12-month non-competition clause even though the ex-employee’s contract also contained non-solicitation and confidentiality clauses.