Employee restrictive covenants

An issue which is always contentious is an employer’s ability to impose and enforce restrictions on former employees working in competition after they have moved on. It tends to be a fight between whether the restrictions amount to reasonable measures to protect the employer’s business or unreasonable restrictions preventing the employee from working elsewhere. With the prospect of expensive court action hanging over the parties it can sometimes turn into a game of bluff and counter bluff! I have noticed an interesting recent decision of the High Court in a case called Patsystems Holding Ltd v Neilly.  The Court confirmed that the reasonableness of a restrictive covenant must be judged at the time it was entered into, not at the time when the employer sought to enforce it. A subsequent change of circumstances, such as a promotion, will not turn an invalid covenant into a valid one. This gives a strong warning to employers to review restrictive covenants, particularly when an employee is promoted. Ideally, the employer should seek fresh acceptance of a covenant if circumstances have changed, either by fresh agreement to the covenant or by asking the employee to sign a new contract containing the covenant. The employment team at Tolhurst Fisher is happy to assist with drafting restrictive covenants or advising employees whether they can be avoided. Contact us on www.tolhurstfisher.com.