An employee had covenanted that throughout the year following termination he would not engage in or be ‘otherwise interested in, whether as a shareholder . . employee or . . in any other capacity’ any business, which was defined in terms not limited to the employer’s competitors. The employer sought to enforce a post employment restrictive covenant to protect confidential information known to the former employee. The trial judge held that the prohibition against shareholding on the part of the employee was too wide because it would catch even a small holding but that it should be severed and removed and that the remainder should be enforced against him.
Held: The Court of Appeal took no issue with the judge’s objection to the prohibition against shareholding but upheld the employee’s appeal on the basis that there were other unreasonable features of the covenant incapable of severance.
Aldous LJ said: ‘In cases where a restrictive covenant is sought to be enforced, the confidential information must be particularised sufficiently to enable the court to be satisfied that the plaintiff has a legitimate interest to protect. That requires an enquiry as to whether the plaintiff is in possession of confidential information which it is entitled to protect. (See Littlewoods Organisation v Harris [1977] 1 WLR 1472 at 1479F). Sufficient detail must be given to enable that to be decided but no more is necessary.’
Judges:
Sir Richard Scott VC, Potter LJ, Aldous LJ
Citations:
[1998] EWCA Civ 188, [1998] IRLR 259
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Littlewoods Organisations Ltd v Harris CA 1977
When construing restrictive covenants in an employment contract, the court should construe the contract in the light of the object and intent of the contract as a whole. It may be read down and need not be read literally. Lord Denning said that it . .
Cited by:
Cited – Thomas v Farr Plc and Another CA 20-Feb-2007
The employee, the former chairman of the company, appealed a finding that his contract which restricted his being employed for one year in the same field after termination, was valid and enforceable. The company had provided insurance services to . .
Cited – Living Design (Home Improvements) Ltd for Interim Interdict SCS 19-Feb-1999
The petitioner company sought to enforce a post employment restrictive covenant agreed to by the respondent. He had given notice to leave, and the parties had setteled the departure with an additional restriction. The respondent denied that the . .
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.143666