Restrictive covenants in employment contracts can be enforced
It's often thought that a provision banning an employee from moving directly to a named competitor may be unenforceable as being in restraint of trade, and indeed that was the argument advanced by Sales Team Leader Benjamin Johnson at Manchester's High Court.
Johnson had resigned from Macclesfield-based separation sciences technology leader Phenomenex, intending to start work for leading competitor Waters UK in the summer. A clause in Mr Johnson’s contract with Phenomenex prevented him from working for several of Phenomenex's competitors (including Waters) within 12 months of leaving Phenomenex. Mr Johnson informed Phenomenex that he was prepared to “take the risks”, leaving Phenomenex with little choice but to apply to Court for an urgent injunction restraining him from working at Waters.
Hearing Phenomenex& lsquo;s application for an interim injunction, the Honourable Mr Justice Alistair Norris ruled that the clause was necessary as a legitimate interim protection for Phenomenex's business and ordered, as an interim measure, that Mr Johnson be debarred from joining Waters.
The case has now settled, and Johnson is not working at either Waters or Phenomenex. Johnson has been ordered to pay a contribution towards Phenomenex’s legal costs.
Jeff Lewis of Brabners, solicitors who represented Phenomenex, said that this demonstrated that businesses should not shirk from enforcing restrictive covenants against departing employees. “Courts are increasingly being prepared to protect the rights of employers. This case shows that an employer should not feel afraid to take on a departing employee if he is planning to move to a competitor in breach of a barring-out clause.”
Richard Solomon, general manager of Phenomenex, said, “We were delighted that the Court upheld our restrictive covenant. We invest significant time and resources in training our graduate employees to develop their skills from the ground upwards, and all that we ask in return is for them to respect what they have already promised and signed up to do. We did not want to have to pursue Mr Johnson, but we had a legitimate concern about the protection of our business and hence the security of all our employees. We are delighted that the Court upheld our contract.”