Tag archives: restraint of trade

In its first decision on restrictive covenants in more than a century, the UK Supreme Court upholds a 6-month non-compete covenant adopting the more liberal approach to the rules of severance

In the case of Tillman v Egon Zehnder Ltd [2019] UKSC 32, the Supreme Court has upheld a 6-month non-compete covenant, adopting the more liberal approach to the rules of severance.

The Court ruled that on its proper construction, the covenant was unreasonably wide in that it restrained the employee from holding a minority shareholding in a competing business but held that the offending part of the covenant could be severed so as to make it enforceable.

Legal background

In the UK restrictive covenants are prima facie void as being in restraint of trade unless they go no further than … Continue Reading

Enforcing employee restraints of trade after termination of employment

This article was written by Steven Adams, an associate at Norton Rose Fulbright South Africa

Introduction

As opposed to various other jurisdictions, such as the United Kingdom, in South Africa, restraints of trade are generally enforceable unless the restraint is found to be unreasonable and contrary to public policy.

The purpose of enforcing a restraint of trade clause is to protect an employer’s proprietary interest.  These interests are usually in the nature of confidential trade secrets, know-how and pricing or customer connections.  The right to choose and practice a trade is a constitutional right (section 23 of the Bill of Continue Reading

Are your restraint of trade provisions enforceable in France?

In France the rules governing restraint of trade provisions in the context of an employment relationship have been established through case law. Generally speaking, restrictive covenants in an employment contract will only be considered enforceable by French courts if:

  • it can be shown that the inclusion of the restriction protects a legitimate business interest; and
  • the covenant is included only to the extent necessary to protect such legitimate interest.

A “legitimate business interest” may include the protection of trade secrets and confidential information, the protection of relationships with customers, prospective customers and suppliers, and the protection of the stability of … Continue Reading

Enforcing employee restraints of trade in the UK

Background

The relevant English law relating to post-termination of employment restrictions (PTRs) arises from case law around the doctrine of restraint of trade, rather than statute.

The basic starting point is that PTRs are void on the basis that they amount to unlawful restraints on trade. English courts will however enforce a restriction to the extent that it is no more restrictive than is reasonably necessary to protect the employer’s legitimate business interests (such as protection of trade secrets and confidential information). English courts’ assessment will be based on the circumstances that were in existence when the PTR … Continue Reading

Restraint of trade clause with more than 8,000 covenants certain and reasonable

A restraint of trade clause with 8,190 separate covenants was considered certain and not wholly unreasonable in a decision of the Supreme Court of Tasmania (Court).

In Australia, restraint of trade clauses are, on the face of it, void as a matter of public policy.  However, Australian Courts may enforce a restraint of trade clause to the extent it is reasonable to protect the former employer’s legitimate business interests.

The decision arose from an application made by Bulk Frozen Foods Pty Ltd (Company) in which the Company sought a declaration that the restraint of trade clause … Continue Reading

Restraint of Trade under Australian law

The recent decision by the Victorian Supreme Court of Appeal in Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 has reaffirmed that the Supreme Court will be reluctant to enforce restraint of trade provisions against departing employees, unless it is satisfied that the particular restraint is reasonable, having regard to the relevant facts.

This decision was an appeal from a decision by Justice Sifris, who held that Pickett, an IT consultant with Wallis Nominees (DWS), should not be restrained from commencing employment with DWS’ client, and that the restraint clause in Pickett’s employment contract that prevented … Continue Reading

Business connections and trading secrets: are your restraints enforceable?

With employees job-hopping more than ever, companies put at risk their clients, strategies and technical advantages if their employees are not properly restrained from moving on to competitor companies by enforceable restraints of trade.  Although the Appellate Division has said with certainty that restraints of trade clauses are presumed to be enforceable in South African law, any agreement will become unenforceable where it contradicts public policy.

Because public policy is framed and developed by the South African Constitution, an employee’s right to choose their trade freely will now influence whether a restraint clause is enforceable, because their constitutional right … Continue Reading

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