In the recent case of Ranson v Customer Systems Plc, the Court of Appeal considers whether behaviour of a senior employee during his notice period in taking steps to compete with his employer was in breach of his duty of fidelity and whether there existed a fiduciary duty which would have placed stricter obligations on the employee. The case highlights the importance of the employment contract and reminds employers of the need to update job descriptions, job duty clauses and post termination restrictions as employees are promoted, so as to ensure they are appropriate and relevant to employees’ roles at all times.
Restraint of Trade
UK Court of Appeal refuses to uphold a barring order against a former employee
This post was also written by Fiona McFarlane.
In Caterpillar Logistics Services (UK) Ltd v Huesca de Crean, an employee who had no restrictive covenant in her contract of employment prohibiting her working for a third party, could not be prevented from taking up employment with a client of her former employer on the grounds that she might breach a confidentiality agreement she had entered into with her former employer. Nor would the Court grant a “barring order” which would prohibit the employee from being involved in a commercial relationship between the employee’s former employer and its client.…
Continue Reading UK Court of Appeal refuses to uphold a barring order against a former employee
When accepting business from former clients breaches a non-solicitation covenant under UK law
The High Court of England and Wales has considered the construction of non-solicitation clauses where the former client initiated contact with the ex-employee. In Baldwins (Ashby) Limited v Andrew Maidstone (PDF), the Court held that the substance of what passes between the parties will determine whether there has been a breach of a non-solicitation clause and that how contact is first initiated is not relevant. The case is a useful reminder of the value of including non-dealing restrictions in addition to non-solicitation provisions in commercial agreements and employment contracts.
What happened in this case?
The defendant, Mr Maidstone, sold his accountancy business to the Claimant (Baldwins (Ashby) Limited) for approximately £1m in September 2007. Following the sale of the business Mr Maidstone was employed by Baldwins until November 2009, when he moved to a firm called Charnwoods. The sale agreement contained a three year covenant protecting the goodwill in the company from Mr Maidstone ‘canvassing, soliciting or endeavouring to entice away’ any of his former clients. Baldwins brought proceedings against Mr Maidstone alleging that he was in breach of this covenant.…
Continue Reading When accepting business from former clients breaches a non-solicitation covenant under UK law
High court considers validity of a ‘no show’ clause
The High Court decision of Tullett Prebon Group Ltd v Ghaleb El Hajjali will be of interest to all employers who recruit highly specialised senior employees. The decision considers the enforceability of a liquidated damages “no show” clause, and how damages should be calculated where an employee changes his mind about joining a prospective employer, after signing an employment contract containing such a clause.
Continue Reading High court considers validity of a ‘no show’ clause