Non-competition clauses in employment contracts, which seek to prevent ex-employees from competing with their former employers for a specified period, have traditionally been a difficult area of law. The courts have struck down many such clauses in the past. However, a properly worded and well considered non-competition clause can prove effective, as an insurance broker has found.
Huw Thomas was the managing director of an insurance brokerage, Farr plc. He left his former firm and brought a claim for constructive dismissal. He also requested that the non-competition clause in his contract of employment be ruled unenforceable because it was an unreasonable restraint of trade. The High Court disagreed, holding that the clause was enforceable. Mr Thomas appealed against this decision.
The Court of Appeal held that Mr Thomas's role was such that he would have come into possession of information which was capable of being protected by the clause (i.e. 'trade secrets'). The fact that it was extremely difficult to ascertain precisely what information he had acquired in his former employment that might be properly regarded as confidential did not invalidate the clause.
Where an employee is in possession of critical business information, which you are entitled to require to be kept confidential after he or she has ceased to work for you, putting a non-competition clause in the contract of employment has much to commend it.
Contact Dean Parnell on 08701 417 154 or at d.parnell@sydneymitchell.co.uk if you would like advice on drafting a non-competition clause specific to the needs of your business.
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