Finance company protects its business against former employee

A finance company has succeeded in using its employment contracts to prevent competition from a former employee for a set period.

The employee had worked for the company as a broker in the energy market. His contract contained a non-compete clause preventing him from working for competitors within a specified territory for six months after termination of his employment.

“Territory” was defined as England and any other country in which the company was operating or planning to operate during the relevant period. The clause also prevented him, for the same period, from enticing away the company’s clients, assisting others to do so, or inducing employees to leave the company’s employment.

He was also prevented from disclosing the company’s confidential information.

The contract provided that he could be placed on garden leave. Time spent on garden leave would not be set off against the period of the post-termination restriction unless it exceeded three months.

The broker gave notice to the company to terminate his contract on 1 July 2016. He was not placed on garden leave during his notice period, but was placed on “back office duties” to restrict his access to clients.

During this period, he sent a list of some of the company’s clients to his new firm.

His employment with the company ceased on 31 October 2016. On 3 January 2017, he began working for his new firm and contacted some of his former company’s clients. The company sought an interim injunction, asserting that the broker was not free to work for competitors until 1 May 2017.

The court granted the injunction, saying there was no doubt that the company’s non-compete clause was not excessive by current standards in the finance industry and so was justified.

Please contact us if you would like more information about the issues raised in this article or any aspect of employment law and protecting your business.