Restrictive Covenants in Employment Contracts

It is sensible for employers to protect themselves by having Restrictive Covenants in Employment Contracts, as otherwise employees may use knowledge and contacts acquired during their employment to compete with their employer after they leave. However, such covenants are ineffective if they are poorly drafted.

A High Court decision illustrates the importance to employers of having effective restrictive covenants, appropriately drafted to an employee’s role, to protect their business. The restrictive covenant in this case stated:

“During your employment with Customer Systems (CS) and for a period of one year afterwards you undertake not to be employed directly or indirectly by any present or past customer of CS with which you have been personally involved in the course of your employment by CS.”

The court held that the covenant relied on by the employer was unenforceable. Its 12-month duration was considered too long, as there was no time limit on the interval between the employee’s involvement with a customer and the employee leaving the business. The inclusion of past customers without any limit on time was unreasonable, as was the absence of any time limit on the employee’s previous involvement with the customer.

For advice on Employment Law contact:
Roland Callaby
Neil Howlett
Andy Hambleton