Coppage v Safety Net Security Ltd  EWCA Civ 1176;  IRLR 970; (2014) EMPLR 045
Court of Appeal (Civil Division)
Ryder LJ, Sir Bernard Rix and Sir Stanley Burnton
Restrictive covenants preventing a former employee from soliciting customers are only enforceable if necessary and no wider than necessary to protect the legitimate interests of the business. Customer lists and information about customers is a legitimate interest. Generally, non-solicitation clauses should be limited to customers with whom the employee dealt within a specified period before the employment terminated. But this case shows that is not always so. It depends on the influence the ex-employee had over customers.
Mr C was a director of SNSL. His contract of employment included a non-solicitation clause preventing him, after his employment ceased, from soliciting the business of customers ‘which could have been undertaken by [SNSL]’. Mr C resigned and contacted five SNSL customers as a result of which those customers terminated their contracts with SNSL. SNSL sued Mr C and his new company for damages for the value of the business lost. Mr C argued that the non-solicitation clause was unnecessarily wide because it could have been limited to those customers with whom he had dealt within six or twelve months before the date he resigned.
The Court of Appeal disagreed and allowed the claim for damages. The six-month period was reasonable and Mr C was a key employee who could influence all customers however far in the past. Furthermore, the limitation of the clause to business which could otherwise have been undertaken by SNSL excluded from its scope any customers who would not have done business with SNSL anyway.
Authoritative analysis of the rules governing termination of employment provides coverage of the...