Our website is set to allow the use of cookies. For more information and to change settings click here. If you are happy with cookies please click "Continue" or simply continue browsing. Continue.

Law for Business

Knowhow - guidance - precedents

25 OCT 2013

Court of Appeal Upholds Post Termination Restriction that was for “Only Six Months”

Clarkslegal

In a refreshingly clear judgment in an area that is notoriously complex and hard for employers to get right, the Court of Appeal has confirmed that the length of a non solicitation clause is a “powerful factor” in assessing the overall reasonableness of the clause and that when the restriction was for “only six months”, that was a “fundamental consideration of reasonableness”. The Court suggested that the length of the restriction could be decisive when assessing what can be finely balanced issues of what the employer’s legitimate interests are.

In Coppage v Freedom Security and Safety Net Security (2013), Mr Coppage was a former employee of the Respondent security company in Birmingham. He was made redundant and worked in competition with his former employer. A successful claim for damages by the former employer followed; the Claimant appealed unsuccessfully.

The relevant contract clause stated:

"It is a condition of your employment, that for a period of six months immediately following termination of your employment for any reason whatsoever, you will not, whether directly or indirectly as principal, agent, employee, director, partner or otherwise howsoever approach any individual or organisation who has during your period of employment been a customer of ours, if the purpose of such an approach is to solicit business which could have been undertaken by us."

There was no provision, as is often the case, limiting the restriction to customers who the employee had dealt with in say the final six or 12 months of employment.

The Court found that Mr Coppage was a “key employee”. Another important factor for the Court was the final part of the clause referring to work which “could have been undertaken” by employer. The Court was satisfied with the drafting, including the use of the word “could”.

As always, restrictive covenant cases are very fact specific and it is very hard to deduce general principles to determine how best to draft contractual restrictions. However, this is a helpful case showing that a short and simple clause can work just fine, so long as the facts suggest that contractual protection is needed on the facts of the case. It reminds us that agonising over lengthy complex clauses designed to protect an employer in all cases will not make the clauses enforceable, if the facts of the case do not merit protection.

 

Nick Huffer, Associate, Clarkslegal LLP
Tel: 029 2055 7554
Email: nhuffer@clarkslegal.com

Jordan Publishing Charities Administration Service

Jordan Publishing Charities Administration Service

The practical, reliable and easy-to-use guide on running your charity

Available in Charity Law Online
Jordan Publishing Company Administration and Governance

Jordan Publishing Company Administration and Governance

"This is an indispensable aid to the busy company secretary. The text is clear, the precedents...

Available in Company Law Online
Subscribe to our newsletters