The employer provided fund management services to private clients. The notice periods for the various employees ranged between three and twelve months, but the handbook governing the terms of employment provided that during the respective notice periods the employer might place the employees on garden leave.
Held: A period of garden leave to be served before the end of the contractual notice period was not to be set off against the period of a restrictive covenant which took effect on termination of the employment contract.
Neill LJ said: ‘The court can exercise its discretion in deciding the permissible length of garden leave but, if the restrictive covenant is valid, the employer is entitled to have it enforced, subject to all the usual grounds on which an injunction may be withheld, such as delay and a finding that damages would be an adequate remedy in the circumstances. Moreover, it is to be remembered that the existence of a garden leave clause may be a factor to be taken into account in determining the validity of a restrictive covenant as at the date of the contract.
I would, however, add a caveat. Terms which operate in restraint of trade raise questions of public policy. The opportunity for an individual to maintain and exercise his skills is a matter of general concern. I would therefore leave open the possibility that in an exceptional case where a long period of garden leave had already elapsed, perhaps substantially in excess of a year, without any curtailment by the court, the court would decline to grant any further protection based on a restrictive covenant. But that is not this case.’
Judges:
Neill, Morritt and Hutchison LJJ
Citations:
Times 03-Jun-1996, Gazette 19-Jun-1996, [1996] ICR 882
Jurisdiction:
England and Wales
Cited by:
Cited – Associated Foreign Exchange Ltd v International Foreign Exchange (UK) Ltd and Another ChD 26-May-2010
The claimant sought interim injunctions to enforce a restrictive covenant against solicitation of customers in a former employee’s contract. The employee, a FOREX dealer, had been placed on garden leave for three months and then his contract . .
Lists of cited by and citing cases may be incomplete.
Employment
Updated: 31 October 2022; Ref: scu.79610