News Article


Post-Termination Restrictive Covenants

An example of where post-termination restrictive covenants have been enforced is in Decorus Ltd v Penfold & Anor.

The Claimant (the employer) was seeking damages and an injunction from the Defendant (a former employee) who it was alleged had broken the terms of the restrictive covenant contained in his employment contract.

High Court finds in favour of the Claimant

The Claimant was an IT reselling business.   The Defendant was a senior employee with access to confidential information regarding most aspects of the Claimant’s business. The Defendant resigned from his employment and informed his employers that he had intended to set up on his own and had informed clients of his new business venture, and had attempted to compete with his employer in the shared business interest.

The Defendant was accused of poaching the Claimant’s clients after he left their employment and set up on his own contrary to the restrictive covenant in his employment contract. The High Court considered the legal principles concerning post termination restrictive covenants and found that the conduct of the Defendant amounted to a breach of his duty of confidence. The information which he used and which was acquired during his employment, was a combination of contact details and information from the purchase logs from which he was aware of the Claimant’s customers’ likely needs.

Damages awarded for breach of post-termination restrictive covenants

The Claimant was awarded damages of almost £29852.17 and granted an injunction preventing the Defendant from breaching further restrictive covenants.

The outcome of the Government’s recent consultation on whether to ban such non-compete clauses to ‘remove the barrier to innovation and employment’ is eagerly awaited. The Department for Business has sought views from employers and employees as to whether non -compete clauses stifle entrepreneurship by preventing people from moving to another employer or developing their own business.

When in doubt as to whether a post-termination restrictive covenant may be enforceable legal advice should always be taken.

Contact DSM Legal Solicitors in Warrington

You can email and we’ll get straight back to you or telephone 01925 937070 and speak to a member of our employment law team today.