Employee ordered to pay employer £50,000
The Court of Appeal has held that an employer could rely on a clause in an ex employee’s contract of employment which prevented him from seeking business from any of his former employer’s customers for 6 months. The former employee was ordered to pay damages of £50,000 for breaching the clause.
Generally a clause in a contract of employment preventing an employee from soliciting business from his employer’s customers after the employment has ended will be void as a restraint of trade. If the employer wants to be able to enforce it, it will need to show that it has a legitimate interest to protect and that the clause is reasonable. In general, the Courts have been slow to enforce clauses which are not limited to customers the employee actually dealt with and of short duration on the grounds that they are too wide.
In the case of Coppage, the former employee was subject to a six month non-solicitation restrictive covenant which prevented him from approaching anyone who was a customer at any point during his employment. He had been employed for 6 years prior to leaving and setting up in competition. Shortly after doing so, he contacted a number of customers of his former employer with a view to their working with him instead.
Although the restriction in the employee’s contract was wide enough to catch customers he had no dealings with during his employment, the Court decided that the employer could rely on it and awarded them damages in the sum of £50,000.
The Court of Appeal dismissed the employee’s appeal of the decision. It placed particular emphasis on the fact that the clause was limited to “only” six months. It also stressed that there are no hard and fast rules in such cases and that each case must be considered on its own facts.
Of considerable assistance to the employer in this case was the fact it had evidence of breach of the clause in the form of 135 telephone calls and 175 texts that the ex-employee had sent to customers. Without that, and the fact the employee was a director, the outcome would no doubt have been very different.
Whilst this case does underline that similar contractual clauses can be treated differently depending on the context, it provides some comfort to employers who want to protect their business from the activities of former employees. It also underlines how important it is, particularly with more senior employees, to ensure your employment contracts are regularly reviewed.
Please contact Claire on Claire.Ingleby@mb-law.co.uk for further advice.
Please note this information is for general guidance only and is not intended to be a substitute for specific legal advice.