The High Court has upheld a covenant restricting a solicitor from joining a competitor for 12 months following the termination of her employment. This decision reinforces the importance of carefully drafting restrictive covenants in employment contracts to ensure the scope of any restrictions go no further than is reasonably necessary to protect an employer’s legitimate business interests.

Post-termination restrictions in employment contracts are designed to protect the employer against competitive activities by former employees. A non-compete clause is typically a restriction that seeks to prevent a departing employee from starting work with a competitor during the term of the restriction. Any post-termination restrictions on an ex-employee’s activities that go further than reasonably necessary to protect a “legitimate business interest” will be void for being in restraint of trade and unenforceable. For more information on restrictive covenants, you can read our Inbrief on “Protecting your business” here.

The courts have developed a four-stage test to determine whether a post-termination restrictive covenant, such as a non-compete clause, is enforceable:

• Firstly, the court must decide what the covenant means when properly construed.

• Secondly, the court must decide whether the former employer has shown that they have a legitimate business interest that requires protection in relation to the employee’s employment.

• Thirdly, the covenant must be shown to be no wider...

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