Restrictive Covenants Put to the Test
- Date: Monday 21st January 2019
- PDF: Download
This month, the Supreme Court will decide on the enforceability of restrictive covenants.
The case to be reviewed is Tillman v Egon Zehnder Ltd, a recruitment and management consultancy.
Restrictive covenants prohibited Tillman to be “concerned or interested in” a competitor for six months. The clause also stipulated that she should not “directly or indirectly engage or be concerned or interested in any business carried out in competition”.
The Court of Appeal ruled that the covenants were unenforceable, since they didn’t just apply to working in competition with the employer but also to any type of shareholding.
They therefore dismissed the clause in its entirety.
The Supreme Court judgement will provide further guidance. In the meantime, we suggest you review the wording of your restrictive covenants and realistically assess how enforceable the clauses are that you use.
Do they effectively prohibit the individual from working in the industry? Are the indicated timescales appropriate?
Please call you HR consultant for further advice if required.
Source: Manuela Grossmann, SSG