Employees who “take the risk” of ignoring a restrictive covenant in their employment contract and moving to a competitor business could suffer potentially serious professional and financial consequences, a Manchester court ruling suggests.
The case involved Benjamin Johnson, who resigned from his post at Macclesfield-based Phenomenex, a specialist in analytical chemistry solutions, intending to start work for 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 told Phenomenex that he was prepared to “take the risks” and the company applied to court for an injunction restraining him from working at Waters.
The Honourable Mr Justice Alistair Norris, sitting at Manchester High Court, 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 Mr Johnson is working at neither Waters nor Phenomenex. He has also been ordered to contribute to Phenomenex’s legal costs.
Richard Solomon, general manager of Phenomenex, said on 8 December: “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.”
Lara Murray, an associate solicitor at Palmers specialising in employment law, said: “The courts can interpret restrictive covenants as a restraint of trade – i.e. curbing someone’s freedom to work where they choose and benefit from their professional skills and knowledge – and may not enforce them unless an employer can show that the covenant goes no further than is reasonably necessary to protect their legitimate business interests.
“Seeking expert advice s likely to be a wise investment in ensuring that a restrictive covenant is appropriate to the specific circumstances of the employer-employee relationship and is drafted in a way that maximises the likelihood of the courts ruling that it is enforceable in the event of a challenge. For more information, please contact us.”