Hayley Trovato, a Senior Associate Solicitor at OGR Stock Denton LLP, has said that a recent Supreme Court decision concerning the use of non-competition restrictive covenants in employment contracts will give employers “some comfort”.
The landmark case [Tillman v Egon Zehnder Ltd] concerned the ability of employers to prevent former employees from taking up work with competitors, potentially taking with them vital commercial knowledge, market insight and know-how.
Hayley Trovato said: “Employers can, to some extent, take some comfort from the long-awaited decision of the Supreme Court this week in Tillman v Egon Zehnder Ltd.
“In unanimously allowing the appeal, the Supreme Court ruled that the offending words in the non-competition restrictive covenant could be removed from the clause without damaging the rest of the covenant, making it enforceable, even though it was accepted that the employer had drafted this restriction in very broad and therefore unreasonable terms. As a result, the injunction was restored.
“It has been over 100 years since the Supreme Court has looked at the rules on restrictive covenants and while this is good news for those employers looking to enforce restrictive covenants, a cautious approach is still recommended.
“Employers should ensure that restrictive covenants are drafted responsibly and no wider than reasonably necessary to protect a legitimate business interest.
“Although the Supreme Court allowed the employer to enforce the other parts of its non-competition clause, there was a suggestion that unreasonable drafting by employers could result in costs orders being made against them.
“This case should act as a stark reminder to employers of the need to review their restrictive covenants regularly in order to ensure their enforceability.”