In this case, the High Court found a suite of non-compete, non-solicitation and non-dealing clauses to be unenforceable as an unreasonable restraint of trade.
The First Defendant, Ms Falconer, was a financial adviser who joined the Claimant company under a contract containing various post-termination restrictions. After six unhappy months, she gave her notice and joined the Second Defendant, Continuum. She was only required to give two weeks’ notice as she was still in her probationary period, during which the Claimant placed her on garden leave.
The High Court granted an interim injunction against Ms Falconer to enforce her restrictive covenants. The case then went to a full trial, where it was found that Ms Falconer had breached her contract in a number of ways - for example, among other things, she had contacted the Claimant’s clients during her gardening leave without permission and she had failed to show her new employer her employment contract containing her restrictions.
However, the Court found her restrictive covenants to be invalid under the doctrine of restraint of trade. For example, her 9-month non-compete clause applied regardless of the short period she had worked for the Claimant and the Court found she had not been there long enough to have built relationships with clients, so as to justify the imposition of a non-compete. Furthermore, the non-compete went beyond what is necessary to protect the Claimant’s legitimate business interests by preventing her from not only working with the Claimant’s existing clients, but prospective clients as well. Ms Falconer’s non-dealing restriction was also very onerous as it prevented her from soliciting or dealing with former clients with whom terms and conditions had been in place during the last 18 months prior to her termination, which clearly encompassed a significant period prior to the start of her employment with the Claimant.
This case highlights how post-termination restrictions cannot be drafted with a "one size fits all" approach and must be bespoke to an employee’s role and status, as well as the relevant factual scenario. Employers should consider whether narrower restrictions might be appropriate for employees during the initial few months of their employment, with wider restrictions only applicable when they have been in post for a longer period.