Restrictive Covenants in Contracts of Employment

A High Court case underlines the importance of the need for regular review of contractual restrictions to ensure they reflect the current position. The court decided that an employee was entitled to an equity share that had been offered to him on joining, despite the employer's argument that he had forfeited it by acting in breach of post-termination restrictive covenants in his employment contract.

The claimant successfully argued that he was not in breach of his non-compete restriction, because the alleged competitive activities (high-level conference moderation) were outside the scope of the restriction. The court also found that, once the claimant had left, there was no one else in the company who carried out these activities, and so the employee could not be acting "in competition" with his former employer. 

The decision is likely to be particularly relevant to small companies, where there is greater scope for individuals to be solely responsible for specific activities.

Contact Keith Parr on 01772 253841 kgp@bsglaw.co.uk