Many people wonder whether there’s really anything an employer can do if a former employee starts taking away its clients. A recent case in the High Court (Safetynet Security Ltd v Coppage), has again emphasised that the Court is quite willing to enforce clauses restraining employees from poaching clients, even where the clause isn’t expressly limited to clients known to the employee.
This was something of a surprising decision, not because it’s unusual for the Courts to enforce such clauses but because such clauses must be no wider than reasonably necessary to protect the business interests of the employer, and arguably this was not so here.
When advising on the drafting of these clauses, I usually recommend that the restriction should not only be limited in time going forward (so that the employee is free to contact clients of the company after a reasonable time, eg 6 months) but also that it should only prevent the employee from doing business with clients with whom he or she has had dealings over a relatively recent period, eg the last 12 months before leaving.
This is still the safest course of action but in this case the employee was the Business Development Director of the company, a small security service, and many of the customers saw him as the “face” of the company. Because of this, it was reasonable for the company to prevent him approaching all the clients of the company for a period.
The decision is a reminder that each case will turn on its own facts and that departing employees should not assume that just because a clause is very restrictive it will not be enforceable. It’s always a question of balancing the interests of the parties, and where it can be demonstrated that a senior employee poses a sufficient threat to a business then the courts are prepared to intervene.
Mind you it’s also worth noting that the Judge was far from impressed with the employee’s evidence whilst appreciating the employer’s open and helpful manner. The employee may reflect on this, when paying his former employer £50,000 compensation, together with legal costs that will no doubt be significant.
