The Court of Appeal has recently handed down a judgment in Safetynet Security Limited v Coppage and Another which will give some reassurance to businesses as to the enforceability of restrictive covenants against departing and former employees, at least at a senior level. In this case Mr Coppage was the business development director of Safetynet Security Limited. His contract of employment included a very commonly found restrictive covenant preventing him, for a period of six months immediately following the termination of his employment, from approaching any customers of the business, if the purpose of such approach was to solicit business. The clause lacked the usual addition confining the restriction to those customers with whom the employee had had direct dealings in a period prior to termination. However, despite the lack of this measure, the court still found that the restrictive covenant was enforceable and Mr Coppage was ordered to pay the sum of £50,000 damages to his former employer for breaching it.
In arriving at its decision the court undertook a very detailed analysis of the case law relating to non-solicitation restrictive covenants and three principals were drawn out of those authorities and highlighted:
1. The court must consider the construction of the clause in question;
2. The court must consider the purpose of the restraint; in this case the purpose of the restraint was to protect Safetynet Security’s customer base and goodwill – something which courts have always found to be a satisfactory and necessary object of such clauses.
3. The court must look at the clause in context and take into account the factual circumstances at the date the contract was made. It is important to note that Mr Coppage’s seniority had some influence on the court’s decision. Had he been a more junior employee such a post-termination restriction may well have been unenforceable. Equally, if the employer company had numerous branches and the employee in question only known a portion of his employer’s clients, the clause might similarly have been unenforceable.
If you require further information about post-termination restrictions please speak to Richard Monkcom, head of Druces LLP’s Employment team or Julian Johnstone, head of Druces LLP’s Litigation team.This note does not constitute legal advice. It is general guidance only and represents the law as at 29 October 2013.