In the context of employment contracts, the High Court has emphasised the need for tight, professional drafting if restrictive covenants are to have any legal effect. In refusing a company’s bid for an interim injunction to restrain two former employees from working for a competitor, the Court ruled that restrictions on their freedom were too wide and were thus unenforceable.
The regional director of a digital magazines publisher (the defendant) had resigned from his position in order to set up a competing business. His employment contract contained provisions relating to confidentiality of the company’s information and he had also signed a ‘non-compete deed’ which purported to place certain restrictions on his activities in the 12 months following his departure.
His former employer (the claimant) sought an interim injunction again the defendant and his new company to prohibit them from engaging or continuing to employ in any competing business two members of the claimant’s sales team (the salesmen) who had resigned with a view to joining the new venture. The claimant also sought to restrain the defendant and his company from approaching certain of its customers or dealing with them for a 12-month period.
Underlining the long-standing reluctance of the courts to enforce restrictions which have the potential to inhibit a worker’s capacity to earn a living as he chooses, the Court noted that neither of the salesmen were parties to the action and that the order sought would significantly impinge upon their ability to work in their specialist field. There was no arguable case that either man should be prevented from indirectly competing with the claimant.
Also refusing to restrain use of the claimant’s allegedly confidential information, the Court noted the defendant’s plea that he had obtained similar, or better, information from other sources and that some of the information was already in the public domain, having been published on the internet. Such uncertainties meant that, if the injunction were granted in the terms sought, the defendant and his company would have no means of knowing what it was that they were prohibited from doing.
White Digital Media Limited v Weaver & Anr. Case Number: HQ13X02791