Non Compete Clause Restrictive Covenant Case Study

Aneil Balgobin, Partner
Author:
Aneil Balgobin
Partner, Head of Employment Law
Date:
15/04/2020

A Restrictive Covenant Case Study – Client Situation

Our client, Mr H, was put on garden leave and his role was made redundant by his previous employer. He found a new job with a business which could be considered a direct competitor of his previous employer.

His former employer found out about his new job and emailed him. The email reminded him of his obligations to his former employer and asked for a meeting to discuss any potential breaches of his former employment contract. Mr H’s wife still worked at the company and was questioned about her husband’s new job.

Both Mr H and his wife felt unfairly pressured by the company, particularly as Mr H had no intention of doing anything wrong and had lost his job through redundancy.

Mr H’s former employer wrote to him alleging that he was in breach of his non compete clause in his contract of employment. They told him that they would be monitoring his compliance with all of his contractual obligations. They also said that they would be contacting Mr H’s new employer.

Mr H was very upset by this letter and contacted our Employment Law Solicitors for legal advice on how to respond.

How We Helped

Mr H spoke to Employment Law Solicitor and Partner, Aneil Balgobin. He spoke to Mr H and his wife, to discuss the facts so far and get all the information he needed. After the discussion, Aneil wrote to Mr H’s former employer, informing them that he had no intention of breaching his non compete clause.

His former employer had representation by a Solicitor and they continued to allege that Mr H had breached his non compete clause. They demanded that he signed a harsh agreement, which would result in him having to leave his new job.

Mr H obviously felt threatened by such an aggressive move and was prepared to sign the agreement to bring the dispute to a close. But Aneil talked him through the legal arguments and worked out a strategy based around the fact that Mr H had been made redundant and lost his job through no fault of his own.

Aneil responded with a letter reiterating Mr H’s position. The letter said that if they tried to stop Mr H working for his new employer and made him unemployed for the second time, this would be an unnecessary restriction and wouldn’t be enforceable in circumstances where he was not damaging his former employer’s business interests.

The Outcome

Aneil negotiated a deal with Mr H’s former employer. He could still work for his new employer, but in a way which gave his former employer peace of mind about protecting its clients and confidential information. There was also an agreement that Mr H’s wife would be kept out of the situation going forward.

Aneil also gave Mr H’s new employer the reassurance that Mr H had not done anything wrong and that they could safely continue to employ him.

Mr H was very happy with the outcome. He could continue in his new job without having to pay any significant legal costs.

For more information see Restrictive Covenants in Employment Contracts.

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