The Supreme Court has ruled for the first time ever on the extent of restrictive covenants!
The Supreme Court has, for the first time ever, considered the extent to which words can be deleted from a restrictive covenant, while keeping the rest of it intact and enforceable. The Supreme Court's decision on 3rd July 2019 in Tillman v Egon Zehnder Ltd, is a great relief to employers who can continue to enforce employment contracts that restrict the activities of staff who wish to work for competitors.
In this court case, Mary-Caroline Tillman, a former investment banker, worked as a consultant at Egon Zehnder where her employment contract contained post-termination restrictive covenants.
Ms Tillman left Egon Zehnder in 2017 to almost immediately take up a job with a direct competitor but her previous employer went to court to seek an injunction to delay her move.
The case was whether part of a covenant in her employment contract restricting her activities after she had left the company constituted an unreasonable restraint of trade.
Ms Tillman alleged that the conditions imposed, which prevented her from being “interested” in competitors for a period of six months and holding shares in any such business, were too wide and so were unenforceable.
The Supreme Court ruled that the covenants were not an unreasonable restraint of trade but if they had been deemed unreasonable, they could have been deleted, leaving the rest of the clause as a valid non-compete clause.
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