Be Reasonable: The Enforceability of Post-termination Restrictive Covenants

The impact on working arrangements caused by the pandemic has led many workers to re-evaluate what they want from a job, with considerations such as flexible and remote working becoming both more desirable and attainable. This is affecting businesses in all sectors, and the impact it can have is not only on a business’s workforce but also on its customer base that is far reaching.

One of the most important things to consider when a worker leaves a business is restrictive covenants. These are often contained in the employee’s employment contract, service agreement or, in some circumstances, a shareholders agreement. Restrictive covenants are contractual restrictions that prevent individuals from doing certain things after their employment ends. Examples include non-compete clauses (preventing individuals working in competition with their previous employer) and non-solicit clauses (preventing individuals soliciting the customers and employees of their previous employer). Clauses protecting the use of confidential information are also often key. Preservation of a company’s connections, workforce and goodwill is vital for many businesses, so it is important to make sure these clauses bite when necessary. So, how do you do that?

The General Approach

The headline is that restrictive covenants will not be enforceable if they are considered unreasonable. This is a fact-specific assessment and a dynamic area of ​​law. However, the courts aim to strike the balance between protecting a business’s interests and not unduly restraining an individual’s ability to work. To enforce a restrictive covenant, a business has to show that:

  1. There is a legitimate interest to protect. Examples of this include the business’s trade connections with customers and suppliers, confidential information and maintaining the stability of the workforce.
  2. The protection is no more than reasonable with regard to the interests of the parties and the public. This is assessed at the point at which the covenant is entered into, rather than at a later date. Both the time period and the geographical area that the restriction covers will be considered.

Recent Case Law

in Richard Baker Harrison v Brooks [2021] EWHC 2652 (QB), the court upheld the claimant’s claim to enforce restrictive covenants against two former employees. The claimant was a distributor of chemicals and minerals. The restrictive covenants contained in the former employees’ employment contracts were:

  • For 12 months following termination, prohibition on soliciting any customers, suppliers or employees
  • For 9 months following termination:
    • Prohibition on involvement with any customers of those parts of the business with which the employee was materially involved for the 12 months prior to termination
    • Prohibition on receipt of anything from the claimant’s suppliers that would affect the claimant’s business
    • Prohibition on employing any employee of the claimant
    • Prohibition on being involved in any business that competes or intends to compete with the claimant

At first glance, these restrictions appear quite wide. However, the claimant argued that they were necessary to protect its legitimate business interests, namely confidential information and trade secrets, connections with suppliers and customers, business opportunities, and the stability of its workforce. The judge responded positively to this and agreed that the restraints were reasonably necessary for the protection of these interests. The judge highlighted the fact that the defendants were able to obtain contracts with suppliers parallel to those that the claimant had, and were only prohibited from dealing with and soliciting customers of the claimant in the same commercial sector. This is therefore a good example of drafting qualified restrictive covenants that do not go beyond what is reasonably necessary.

Interestingly, the defendants in this case argued that all of the covenants should be three months shorter. However, the judge highlighted that a covenant would only be too long to be reasonable if a “much less far-reaching” covenant would be sufficient. In the judge’s view, a difference of three months was not “much less far-reaching”, demonstrating that the courts are unwilling to get into lengthy debate about the precise time period it is appropriate for a covenant to endure.

in contrast, in Dwyer (UK Franchising) Limited v Fredbar Limited [2021] EWHC 1218 (Ch), the court held that the restrictive covenants in the franchise agreement between the parties were not enforceable. The claimant, who was the franchisor of “Drain Doctor brought”, a claim against Fredbar Limited (a Drain Doctor franchisee) and Mr. Bartlett (guarantor for Fredbar Ltd). Mr. Bartlett had no prior experience of plumbing and drainage work prior to setting up the franchisee business, and he ran the business from his home.

After termination of the franchise agreement, Mr. Bartlett started trading as “Daily Drains”. Dwyer took issue with this and attempted to prevent Mr. Bartlett from doing so. The post-termination restrictive covenants in the franchise agreement prevented Mr. Bartlett from being involved with a business similar to, or competitive with, the “Drain Doctor Business”:

  • Within the former franchise territory (save for having financial interest in such a business that did not allow him to influence the economic conduct of such a business)
  • That operated within five miles of the former franchise territory

Both of these restrictions were operative for 12 months after the termination of the franchise agreement. It was argued by Mr. Bartlett that these restrictions were too wide, because they left him unable to be employed by similar businesses even if there was no confusion with Drain Doctor, and unable to use his home as his registered office address even if operating elsewhere. The judge agreed with Mr. Bartlett. In particular, there was no definition of the “Drain Doctor Business” within the 100-page franchise agreement and so the judge interpreted the restrictions as preventing Mr. Bartlett from being involved in any plumbing or drainage business within the Cardiff territory. Essentially, this would mean that he was unable to work in the area for 12 months. The judge found this unacceptable, in terms of geographical scope and length of time. The other key consideration was the inequality in bargaining powers between Dwyer and Mr. Bartlett at the time the franchise agreement was entered into.

Eville and Jones v Aldiss [2022] EWHC 269 (QB) is a good example of how the seniority of an employee can affect a judge’s conclusion. The defendant was a shareholder and the joint managing director of the claimant company, and his shareholders agreement contained the following restrictions:

  • Prohibition on becoming involved with a business that has competed with the group during the last 12 months in a territory in which the group has operated during the last 12 months, while still holding shares
  • Prohibition on becoming involved with competitors in the territory, soliciting customers and/or soliciting employees for 18 months following the cessation of the shareholders agreement

The judge concluded that the restrictions were reasonable and, therefore, enforceable. The judge took into consideration the fact that the defendant was the managing director, and, therefore, had a privileged position with access to a significant amount of confidential information.

How to Draft an Effective Post-termination Restrictive Covenant

As the above cases demonstrate, there are no hard and fast rules about what will be considered a reasonable restrictive covenant. However, a recurrent theme is that covenants should be appropriate for the particular circumstances of any given employment relationship, so it is important to bear in mind the bargaining power and seniority level of the employee. Covenants that are qualified so that they relate to specific parts of the business or specific geographical areas are typically more likely to be enforceable, as this assists the argument that they are proportionate to the legitimate business interests that they protect.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top
slot korea slot princess slot thailand rtp slot ladangtoto 888slot slot zeus slot thailand slot kamboja mahjong ways 2 slot deposit pulsa 888slot sv388 ladangtoto slot luar negeri slot deposit qris slot thailand slot deposit dana slot jepang rtp slot joker123 slot kamboja slot gatot kaca https://penghargaan.kemenkopukm.go.id/demo/ slot thailand slot dana 888slot slot zeus ladangtoto sv388 slot server kamboja slot server jepang slot deposit pulsa joker123 pg soft mahjong ways 2 888slot gb777 joker123 slot zeus slot rusia slot jepang slot zeus slot77 pg soft rtp slot slot thailand slot thailand slot88 nolimit city slot jepang slot kamboja slot777 rtp slot slot zeus slot server luar negeri sv388 mahjong ways 2 slot deposit dana slot deposit ovo pg soft sweet bonanza wild bandito thor megaways mahjong ways 2 slot deposit pulsa meong77 spaceman slot gopay slot ovo slot dana slot server kamboja slot server thailand slot server jepang slot thailand slot88 slot zeus slot server kamboja slot thailand slot kamboja slot jepang slot zeus rtp slot slot mahjong ways slot thailand slot zeus slot777 slot pulsa slot dana slot thailand slot88 ladangtoto slot mahjong ways slot thailand slot kamboja slot qris slot zeus pg soft slot88 mahjong ways 2 slot zeus slot server kamboja slot deposit dana slot deposit ovo slot deposit gopay slot dana nolimit city slot princess slot kamboja slot777 slot88 mahjong ways 2 slot thailand slot dana slot kamboja slot77 slot zeus slot luar negeri https://bpkad.muratarakab.go.id/public/hacksaw-idn/ https://bpkad.muratarakab.go.id/public/mandiri-gacor/ ASIA GAMING SLOT SEABANK SLOT SAKUKU slot dewa x500 https://bpkad.muratarakab.go.id/public/sjoker123/ sv388 starlight princess slot thailand slot kamboja slot jepang slot luar negeri slot777 slot zeus mahjong ways 2 slot888 rtp slot slot zeus slot88 slot zeus slot princess pg soft slot777 slot kamboja slot jepang slot rusia slot malaysia slot korea slot myanmar https://bpkad.muratarakab.go.id/public/smahjong/ SLOT NEOBANK SLOT LINKAJA AKUN PRO PLATINUM CHEAT SLOT https://sikerma.untirta.ac.id/application/libraries/pragmatic/ slot maxwin https://sikerma.untirta.ac.id/application/libraries/sgopay/ Slot Thailand Slot Zeus http://labse.ce.undip.ac.id/sejarah/gacorx/ Slot Thailand Starlight Princess Mahjong Ways 2 Slot Maxwin Slot Thailand Sv388 Joker123 Starlight Princess Mahjong Ways 2 Slot Maxwin SLOT MEGAWAYS SLOT TRIOFUS CHEAT SLOT SLOT MANDIRI SLOT GANAS SLOT LINKAJA ladangtoto SLOT DEWA ZEUS SLOT BANTENG SLOT MANTAP SLOT X500 Slot Thailand Slot Zeus Slot Thailand Slot Zeus Sv388 Pg Soft Starlight Princess Slot Thailand Slot Zeus slot thailand slot server luar negeri slot qris slot thailand akun pro kamboja akun pro jepang slot filipina slot rusia slot kamboja joker123 slot zeus slot88 888slot slot deposit pulsa mahjong ways 2 slot jepang slot dana slot luar negeri koi gate nolimit city slot thailand slot princess slot zeus slot77 ladangtoto slot thailand slot kamboja slot mahjong slot777 slot thailand slot megaways slot ikan https://bpkad.muratarakab.go.id/system/core/s888/ https://bpkad.muratarakab.go.id/system/core/s777/ slot mania NEW SLOT POLA GACOR Joker123 Slot Thailand Slot Gacor Slot Zeus Slot Princess Slot Maxwin Pg Soft RTP Live Slot Pulsa Slot Server Luar Slot Thailand Mahjong Ways 2 Pg Soft Slot Zeus Sv388 Starlight Princess Joker123 Slot Maxwin Slot Ovo Slot Gopay Slot Bank BSI Gates Of Gatotkaca Twilight Princess Idn Slot Slot Toto Slot Anti Rungkad Slot Receh Slot Hoki Slot Asia Dewa Slot Depo Slot Raja Slot Nexus Slot Slot X500 Slot Dana Slot Server Luar Starlight Princess Slot Thailand Slot Hongkong Joker123 Slot Zeus Starlight Princess Sv388 Slot Thailand Slot Zeus Joker123 Sv388 Starlight Princess Mahjong Ways 2 Slot Hongkong Pg Soft Slot Zeus Sv388 Joker123 Slot Princess Slot Thailand Slot Thailand Slot Zeus Mahjong Ways 2 https://imwi.ac.id/assets/files/gacor-maxwin/ Slot Thailand Slot Zeus https://mandiri-gacor.angkolatimur.tapselkab.go.id/ jp slot slot ganas https://cheat-gacor.angkolatimur.tapselkab.go.id/ crazy time live slot qris https://sqris.angkolatimur.tapselkab.go.id/ slot akurat https://deposit-mandiri.pfn.co.id/ slot bca slot bni https://deposit-bri.pfn.co.id/ nolimit city slot thailand qris nolimit city slot korea slot zeus https://sibangkodir.bpsdm.jatimprov.go.id/vendor/phpspec/sqris/ nolimit city SLOT777 https://d3akt.feb.unri.ac.id/demo/ slot new terbaru https://rujak-bonanza.old.telusur.co.id/ slot gatot kaca https://bonanza-gold.old.telusur.co.id/ slot sugar rush https://x500-gacor.old.telusur.co.id/ https://server-luar-negeri.pfn.co.id/ https://bpusdataru-probolo.jatengprov.go.id/products/ server thailand https://pragmaticplay.dharmasatyasarana.co.id/ https://joker123.dharmasatyasarana.co.id/ https://pg-soft.dharmasatyasarana.co.id/ https://server-thailand.dharmasatyasarana.co.id/ https://dana.sidamaju.skom.id/ https://ovo.sidamaju.skom.id/ https://gopay.sidamaju.skom.id/ https://server-thailand.old.telusur.co.id/ https://server-kamboja.old.telusur.co.id/ https://server-rusia.old.telusur.co.id/ https://server-hongkong.old.telusur.co.id/ http://mahjong-ways.old.telusur.co.id/ https://idn.old.telusur.co.id/ https://starlight-princess.old.telusur.co.id/ https://zeus.old.telusur.co.id/ https://dana.old.telusur.co.id/ https://gacor88.old.telusur.co.id/ https://sabung-ayam-online.old.telusur.co.id/ https://pulsa.old.telusur.co.id/ https://pragmaticplay.old.telusur.co.id/ https://pg-soft.old.telusur.co.id/ https://joker123.putramuko.co.id/ https://akun-pro-rusia.mariyadl.sch.id/ https://ws168.putramuko.co.id/ https://pgsoft.putramuko.co.id/ sv388 joker123 zeus slot princess 1000 mahjong ways rtp slot slot88 server thailand sabung ayam online slot zeus pgsoft mahjong ways digmaan slot ovo joker123 server thailand ladangtoto slot zeus mahjong ways rtp slot slot princess sv388 joker123 digmaan powergaming88 powergaming88 powergaming88 server jepang server kamboja slot dana server thailand server hongkong slot ovo slot gopay slot linkaja joker123 nolimit city sv388 starlight princess mahjong ways pg slot slot zeus server thailand joker123 nolimit city slot dana sv388 server thailand joker123 sv388 mahjong ways zeusslot powergaming88 starlight princess idn slot 888 slot https://live-casino.pta-bali.go.id/ https://mi.pta-surabaya.go.id/mahjong-ways/ ladangtoto https://joker123.elearningmansatuokit.sch.id/ slot server thailand slot dubai slot malaysia slot kamboja sbobet sabung ayam online slot pragmatic zeus slot slot pg soft mahjong ways slot dana slot thailand 888 slot gacor88 gb777 ying77 66kbet ladangtoto2 slot thailand https://slot-thailand.itr.ac.id/ https://pn-watansoppeng.go.id/media/jui/server-thailand/ https://dinkes.hsu.go.id/wp-content/uploads/server-thailand/ ladangtoto slot thailand nolimit city koi gate zeus slot slot malaysia slot china slot rusia slot jepang slot amerika slot filipina slot dana sicbo online roulette online lice casino joker slot slot gacor maxwin slot mahjong slot303 live22 baccarat online slot hongkong slot303 slot88 nolimit city slot ovo slot gopay slot77 pragmati play starlight princess slot pg soft slot mahjong slot zeus slot thailand slot zeus starlight princess mahjong ways joker123 sv388 rtp slot slot dana slot ovo slot gopay nolimit city digmaan sabung ayam online powergaming88 powergaming88 slot kamboja slot dana pgsoft sabung ayam online slot princess slot777 slot jepang slot korea slot kamboja slot dana slot ovo joker123 rtp slot slot thailand slot zeus starlight princess mahjong ways joker123 sv388 rtp slot joker123 sabung ayam online slot pragmatic slot dana slot mahjong zeus slot slot thailand starlight princess slot pragmatic slot thailand sv388 joker123 slot zeus mahjong ways server thailand slot123 slot gacor slot dana slot mahjong slot maxwin slot pg soft gaming88 slot kamboja sabung ayam online slot mania slot zeus joker123 slot gacor slot jepang slot zeus akun vip slot pragmatic slot bet 100 sv388 mahjong ways pg soft slot maxwin zeus slot slot88 sv388 slot zeus slot princess sv388 pg soft mahjong ways slot zeus starlight princess joker123 slot thailand sv388 slot dana slot kamboja slot88 slot kamboja slot thailand slot thailand slot thailand slot dana slot thailand fafaslot sv388 slot zeus joker123 sv388 slot thailand pg soft mahjong ways slot zeus starlight princess rtp slot sv388 sabung ayam online 66kbet ying77 dewaslot ladangtoto gaming88 slot thailand slot maxwin gaming88 slot123 mahjong ways starlight princess joker123 slot pg zseus slot servee thailand 66kbet gaming88 ying77 ladangtoto dewaslot sabung ayam online slot thailand slot77 slot thailand server thailand slot88 slot maxwin slot thailand server thailand slot88 slot thailand slot mahjong slot88 slot zeus pg soft slot gacor maxwin sv388 joker123 ladangtoto 66kbet ying77 slot thailand server thailand slot maxwin slot88 pragmatic play judi bola live casino sv388 sbobet mahjong ways pragmaticplay sv388 sv388 pragmatic play slot gacor maxwin pg soft gates of olympus joker123 sv388 pg soft slot mahjong slot dana sv388 fafaslot idn poker joker123 mahjong ways sabung ayam online pg soft pragmatic slot petir slot olympus slot mania fafaslot slot mania fafaslot habanero ladangtoto ying77 66kbet gaming88 slot thailand server thailand sabung ayam online slot mania slot mahjong slot bet 200 slot dana slot hoki slot x500 slot pgsoft slot thailand slot kamboja slot jepang slot amerika slot mahjong slot gacor 2023 slot x500 ladangtoto slot server kamboja nolimit city digmaan slot thailand dewaslot digmaan sv388 slot joker123 mahjong ways 2 slot zeus starlight princess slot88 pg soft slot olympus 66kbet ladang toto ying77 gaming88 dewaslot pg soft 66kbet ying77 ladangtoto dewaslot scv388 sabung ayam online slot sabung ayam online live casino 66k ladangtoto digmaan slot pragmatic slot jepang slot china slot kamboja slot rusia slot malaysia slot amerika slot thailand slot zeus slot ovo slot dana slot gopay sicbo online roulette online joker123 slot mahjong tembak ikan online joker123 live casino slot123 66k ying77 ladangtoto sabung ayam online 66k ying77 ladangtoto live casino online sabung ayam online 66k ying77 ladangtoto slot thailand ladangtoto ladangtoto sv388 ladangtoto ladangtoto ladangtoto sv388 ladangtoto sv388 66kbet ying77 gaming88 dewaslot ladangtoto slot thailand slot thailand ladangtoto 66k bet ying77bet sv388 66kbet ying77 ladangtoto 66k one ladangtoto ying77 slot maxwin 66k bet ying77bet ladangtoto slot zeus slot thailand slot thailand server thailand slot thailand slot thailand server thailand slot thailand slot thailand slot thailand slot thailand slot thailand slot thailand slot thailand slot thailand slot thailand slot gacor ladangtoto2 slot thailand server thailand ying77 bet ying77 ladangtoto 66k bet slot gacor server thailand slot88 slot gacor slot thailand slot88 slot thailand ying77 ying77 powergaming88 slot88 ladangtoto ladangtoto sabung ayam online slot thailand slot maxwin sv388 pg soft mahjong ways sv388 mahjong ways 2 sv388 slot thailand 66k bet slot sv388 ladangtoto slot zeus slot gacor dewaslot ladangtoto 66k bet slot dana sabung ayam online sabung ayam inline slot thailand slot thailand slot88 slot thailand slot pgsoft slot slot mahjong slot thailand fafaslot slot princess slot gopay slot toto slot server thailand slot thailand slot gacor slot server thailand slot thailand slot gacor slot kakek zeus Joker123 Mahjong Ways 2 Sv388 Sbobet Slot Dana Slot Thailand slot thailand situs slot wwg slot slot daftar judi slot online indonesia slot mahjong ways slot gacor slot mawin slot gacor slot thailand slot thailand slot gacor slot gacor slot gacor demo slot pragmatic sv388 slot88 pgsoft slot thailand slot gacor slot ovo Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia Daftar Situs Judi Slot Online SLOT88 lucky neko slot gacor slot88 slot kakek slot dana slot maxwin slot server luar negeri slot thailand Slot Mahjong Ways 2 Mudah Jackpot Paus di PG Soft Hari ini 2023 Lucky Neko Situs Slot Gacor Pgsoft Hari Ini SITUS SABUNG AYAM SV388 ONLINE DAFTAR LINK LOGIN APK AGEN SV388 Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia powergaming88