Recent cases on restrictive covenants

Non-compete clauses
 

Tillman v Egon Zehnder Limited [2017] EWCA Civ 1054

 

Facts

 

  Conclusion

 

Industry: Executive recruitment   Invalid
Seniority:

Co-Global Head of the Financial Services Practice Group

Duration/Scope: Six months
Decision:

Non-compete invalid because it did not allow for individual to even hold a minor shareholding (e.g. one share) in a competing business as an investment. Restriction was “impermissibly wide” i.e. it went further than was necessary to protect the company’s legitimate business interests. Clause held to be unreasonable restraint of trade.

 

Bartholomews Agri Food Limited v Thornton [2016] EWHC 648 (QB)

 

Facts

 

  Conclusion

 

Industry: Agricultural merchant   Invalid
Seniority:

Agronomist (however, Thornton was only a trainee when the restriction was entered in to)

Duration/Scope:

Six months within specified area and former employer would continue to pay Thornton during that time

Decision:

Restriction was “manifestly inappropriate” for a junior employee. Restriction covered all customers regardless of T’s contact with them or even knowledge of them. T’s customer base represented 1% of the company’s annual turnover. High Court judge: “To my mind it is contrary to public policy in effect to permit an employer to purchase a restraint […].

 

Sunrise Brokers LLP v Rodgers [2014] EWCA Civ 1373

 

Facts

 

  Conclusion

 

Industry: Interdealer broker

  Valid – albeit that employer agreed to a shorter notice period (6 months) and a shorter non-compete (4 months)

Seniority: Derivatives broker
Duration/Scope:

12 month notice period and 6 month non-compete post-termination

Decision:

Fixed term contract to September 2014; after which time 12 months’ notice would be required. R purported to give notice in March 2014 and the company did not accept it (arguing that notice had not been given in accordance with the contract). R refused to return to work after having given notice (i.e. from March 2014). The company stopped paying him but noted the employment had not been terminated.

The High Court found that the company’s non-payment was not a breach as payment was based on the employee being ready and willing to work. The High Court issued a declaration that the contract subsisted and an injunction requiring the employee to observe the contractual terms for the remainder of the notice period.