Post-employment restrictions on the employee included a covenant on his part not for six months to ‘undertake, carry on or be employed, engaged or interested in any capacity in . . any business activity’ of a specified character. Among the employee’s various contentions that the restrictions were in unreasonable restraint of trade was a contention that the word ‘interested’ disabled him from holding even a small quantity of shares in companies of the specified character.
In response the employer adverted to two features of the contract. Thus, as Foskett J explained the employer relied on an earlier clause of the contract under which during his employment the employee had been permitted to hold small amounts of shares, even apparently in competing companies. This was the foundation of the employer’s primary argument, which the judge described as follows and which he accepted: ‘it cannot sensibly have been intended that [the employee] should be subject to a more onerous restriction as to shareholdings after his employment had terminated than whilst still an employee, particularly if it is suggested that the more onerous obligation is created by a clause that makes no express reference to shareholdings at all. In other words, whatever ‘interested in any capacity . . in any business activity’ means, it cannot be a reference to a shareholding.’
Foskett J explained that the employer also relied on the fact that the covenant prohibited the employee from being interested in a ‘business activity’ and it argued that passive investment by way of a minority shareholding was not a ‘business activity’.
Judges:
Foskett J
Citations:
[2017] EWHC 768 (QB), [2017] IRLR 698
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – Tillman v Egon Zehnder Ltd SC 3-Jul-2019
The company appealed from rejection of its contention that its former employee should be restrained from employment by a competitor under a clause in her former employment contract. . .
Cited – Tillman v Egon Zehnder Ltd SC 3-Jul-2019
The company appealed from rejection of its contention that its former employee should be restrained from employment by a competitor under a clause in her former employment contract. . .
Lists of cited by and citing cases may be incomplete.
Employment
Updated: 10 April 2022; Ref: scu.581983