Restrictive covenants in employment contracts have taken a bit of a battering in the courts of late, but recently they seem to be making something of a comeback. In a recent case, a firm of solicitors sought to prevent, by way of an injunction, a former employee from approaching its clients and from practising within a radius of six miles of her former office for a period of a year. The ex-employee, who was a commercial property lawyer, claimed that the two clauses were too widely drawn to be effective. In particular the ‘non-dealing’ clause prevented her from contacting any clients of her former firm, not just those with whom she had previously dealt.
In the case of the geographical restriction, the employee was successful – the clause was deemed to be more restrictive than was necessary to protect the interests of her former employer. Many of the businesses in that area were not clients and were not likely to become clients of her former firm. Indeed, some had been clients of the firm but were clients no longer.
In the case of the restriction on approaching the firm’s clients, the firm was on better ground. The ex-employee argued that some of the firm’s clients would have left and it was unfair to prohibit her from approaching them and also that the clause was too wide because it prevented her from approaching clients regarding classes of work which were not within her specialism. The court rejected both of these arguments. In their view, that clause had certainty as to its area of application and was fair protection with regard to the restriction it placed on her and the period of time for which it was operable.
Restrictive covenants which are too widely drawn will be thrown out by the court but, properly worded, they can provide a valuable protection for your business.
