Tag archives: restrictive covenants

Restrictive covenants – severance of words with “fantastical” consequences and the impact of delay in issuing proceedings

In the recent case of Boydell v NZP Ltd and others [2023] EWCA Civ 373 the Court of Appeal considered two key issues in relation to a non-compete clause: First with regard to severance: whether the High Court’s decision to sever words from a non-compete clause went beyond the principles set out by the Supreme … Continue reading

The Financial compensation for a non-compete provision can be invalid if too high says the French Supreme Court!

In France, the rules governing post-termination, non-compete and/or non-solicitation clauses in employment contracts have been established through case law. Restrictive covenants in an employment contract are only considered enforceable by French courts if they meet the following criteria (which are cumulative) : – They do not extend beyond what is reasonably necessary to protect the … Continue reading

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 … Continue reading

Courts Continue to Chip Away at Restrictive Covenants

Powell River Industrial Sheet Metal Contracting Inc. (P.R.I.S.M.) v Kramchynski, 2016 BCSC 883, is a decision from the Supreme Court of British Columbia that dealt with the enforcement of a restrictive covenant in the context of a commercial transaction. The decision stands for the proposition that a court may refuse to enforce a restrictive covenant … Continue reading

How to Successfully Include a Restrictive Covenant in a Current Employment Contract

In order to best protect the employer’s commercial interests and competitiveness, it is often crucial to include restrictive covenants in employment contracts. It is of equal importance to ensure that these covenants respect the limits established in the case law for them to be enforceable by the courts. Indeed, they may be deemed null and … Continue reading

Enforcing employee restraints of trade after termination of employment – an update

The legal framework for post-contractual non-compete covenants is unchanged since our last post on the topic in 2013. It is nevertheless worth mentioning the following interesting court decisions which deal with the enforceability of employee restraints and the employer’s obligation to pay compensation: Pursuant to the statutory provisions in sec. 74 et. seq. German Commercial … 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 … Continue reading

What about non-compete compensation payments in case of the employer’s insolvency?

In reference to a previous post, entitled “Limits on non-compete and non-solicitation clauses under German law” by Bettina Goletz, we have been asked about non-compete compensation payments in case of the employer’s insolvency. This post will address whether the employee is entitled to compensation payments under a post-contractual non-compete clause in the situation where the … Continue reading

The (limited) ability to restrict employees’ freedom of speech following the termination of their employment contract

Freedom of speech is considered to constitute a fundamental right for employees both outside and within an employer’s premises. However, generally speaking, the exercise of this right is not considered to be legitimate if it leads to abuse, such as excessive, insulting or defamatory statements. Moreover, regardless of the existence of any abuse, French employment … Continue reading

Restrictive Covenants in Canadian Employment Law

This post was contributed by Shelagh Burrowes, Associate, Norton Rose Fulbright Canada LLP (Calgary) Restrictions placed on former employees by way of restrictive covenants, such as non-solicitation and non-competition agreements, may be imposed only if there is a genuine need to protect the employer’s interests and will be subject to close judicial scrutiny.  Whether or … Continue reading

Restrictive Covenants in China

Restrictive covenants imposed on employees in the People’s Republic of China (PRC) are normally in the form of non-compete and non-solicitation obligations. PRC law sets out some general principles on non-compete obligations but is silent on non-solicitation obligations which are therefore generally subject to the mutual agreement of the parties concerned. As a general principle … Continue reading

Restrictive covenants

  In Colombia as in many other Latin-American countries, non competence clauses are enforceable for the duration of the employment contract. This means that the restriction will disappear once the labor relationship is terminated. The fact is that according to Article 26 of the Labour Code, parties in a labor relationship are allowed to agree … Continue reading

Restricted covenants under Venezuelan labor legislation

Under Article 20 of the Regulations to the abrogated Organic Labor Law (which is still in force as long as its rules do not contravene the New Labor Law), the enforcement of non-compete provisions is limited. Such Article expressly provides that during the employment relationship, the employee shall refrain from carrying out negotiations on her/his own … Continue reading

Restrictive covenants in Quebec

When it comes to non-compete clauses, the Civil Code of Quebec clearly sets out the required elements: 2089. The parties may stipulate in writing and in express terms that, even after the termination of the contract, the employee may neither compete with his employer nor participate in any capacity whatsoever in an enterprise which would … 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 … Continue reading

Limits on non compete and non solicitation clauses under German law

During the course of their employment relationship, employees are prohibited from competing with their employer and from soliciting other employees and/or customers; this applies even if there is no express provision in the employment agreement. With regard to a post contractual non-compete covenant agreed before the employment’s termination there are several restrictions which have to … Continue reading

Restrictive covenants in Hong Kong

This post was contributed by Marie Kwok, Of Counsel, and Rebecca Hui, Associate, at Norton Rose Hong Kong Under Hong Kong law, restrictive covenants (e.g. non-compete and non-solicitation clauses) are prima facie unenforceable as they are restraints of trade and against public policy. However, the Courts have upheld certain restrictive covenants provided that the following requirements … Continue reading