Restrictive covenants in employment contracts – new development

2019-07-18 Jennifer Renney-Butland posted:

Restrictive covenants in employment contracts – new development

The law on restrictive covenants and restraints in employment contracts has not been challenged in the Supreme Court (previously the House of Lords) for over 100 years, and therefore this week’s decision in the case of Tillman v Egon Zehnder Ltd [2019] is causing quite a stir in legal circles.

Ms Tillman was employed by the professional recruitment company from 2004 until her resignation in 2017 when she notified her employer she would be joining a competing business. Her employment contract contained a non-compete clause which sought to prevent her working in or “being interested in” any competing business for 6 months after termination. Ms Tillman argued that the non-compete clause was unenforceable and an unreasonable restraint of trade.

In this case the Supreme Court held that the clause was unenforceable but conceded that if the restriction could be made reasonable by the removal (but not the addition) of certain words, and provided the removal of those words did not create a major change to the overall effect of all the restrictions, then the employer’s “bad” covenant could be rescued and could be enforceable.

The decision emphasises the need for employers and employees to make sure that restrictions are carefully drafted to meet their needs, and provide protection where necessary, especially when an employee is promoted to a new position.

If you have questions regarding employment contracts get in touch with us by giving us a call on 01225632240 to speak to one of our experienced solicitors. You can also email us at info@renneyandco.com with any questions.

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