25 October 2013 #Employment
In a refreshingly clear judgment in an area that is notoriously complex and hard for employers to get right, the Court of Appeal has confirmed that the length of a non solicitation clause is a “powerful factor” in assessing the overall reasonableness of the clause and that when the restriction was for “only six months”, that was a “fundamental consideration of reasonableness”. The Court suggested that the length of the restriction could be decisive when assessing what can be finely balanced issues of what the employer’s legitimate interests are.
In Coppage v Freedom Security and Safety Net Security (2013), Mr Coppage was a former employee of the Respondent security company in Birmingham. He was made redundant and worked in competition with his former employer. A successful claim for damages by the former employer followed; the Claimant appealed unsuccessfully.
The relevant contract clause stated:
"It is a condition of your employment, that for a period of six months immediately following termination of your employment for any reason whatsoever, you will not, whether directly or indirectly as principal, agent, employee, director, partner or otherwise howsoever approach any individual or organisation who has during your period of employment been a customer of ours, if the purpose of such an approach is to solicit business which could have been undertaken by us."
There was no provision, as is often the case, limiting the restriction to customers who the employee had dealt with in say the final six or 12 months of employment.
The Court found that Mr Coppage was a “key employee”. Another important factor for the Court was the final part of the clause referring to work which “could have been undertaken” by employer. The Court was satisfied with the drafting, including the use of the word “could”.
As always, restrictive covenant cases are very fact specific and it is very hard to deduce general principles to determine how best to draft contractual restrictions. However, this is a helpful case showing that a short and simple clause can work just fine, so long as the facts suggest that contractual protection is needed on the facts of the case. It reminds us that agonising over lengthy complex clauses designed to protect an employer in all cases will not make the clauses enforceable, if the facts of the case do not merit protection.