Question – What does Jeremy Clarkson have in common with your local beautician?
Leaving aside the endless humorous possibilities, an employment lawyer will tell you that both have restrictions in their contracts of employment known as “restrictive covenants”.
Anyone working for a business may have access to information that is sensitive to that business and which the employer would not want ending up in the hands of a competitor. For Clarkson and the BBC this information would relate to the mechanics and knowhow involved in creating a highly success TV programme which could be used to set up in competition at a rival channel. For a beautician this might be access to customer lists, supplier lists and appointment details which could be “borrowed” and taken to a new employer.
To try and prevent this potentially damaging behaviour, businesses will often write restrictions into their contracts of employment to limit what a former employee can do when their employment comes to an end. This makes those former employees less attractive to competitors who might wish to use their knowledge to encroach upon the business’s markets and clients.
Jeremy Clarkson has just such a clause in his contract with the BBC which will prevent him from hosting a car show on a UK channel for two years. If he were to ignore this and go ahead anyway, the BBC would almost certainly seek an injunction in the High Court to prevent him from doing so and additionally could sue him for substantial costs and damages.
As specialist employment lawyers we regularly see people with restrictive covenants who want to change employer. The question they always ask is whether the restrictions are legal and enforceable, or whether they are unreasonable and unenforceable restraints of trade?
The difficulty with restrictive covenants is that the answer is rarely black and white. It will depend on how widely the restrictions are drawn while also taking account of the seniority of the ex-employee.
- The employer will argue that they are designed to protect legitimate business interests and that they extend no further than is reasonably necessary to protect those interests
- The ex-employee will argue that they go further than is needed to protect a legitimate business interest and are too broad to be fair and reasonable
If a compromise can’t be reached by negotiation then the employer will have to decide whether they are prepared to seek an injunction. This can be very costly both for the business to take and the employee to defend, so the decision should be based on how much the business stands to lose if they do nothing. Going back to our earlier example, for a junior beautician with limited access to important information it is unlikely to be worth the cost. For a global star such as Jeremy Clarkson, the BBC could potentially lose tens or hundreds of millions of pounds worth of business, far outweighing the legal costs involved.
If legal action goes ahead, it is down to a High Court judge to decide whether the restrictions are enforceable and this is done by looking at the facts on a case by case basis. For our beautician, a ban on working as a beautician within 5 miles for a period of 6 months might be considered reasonable. For Jeremy Clarkson, a much broader UK wide restriction for 2 years stands a good chance of being reasonable when it would be completely unreasonable for our non-superstar beautician. Of course, if he or she became a famous make-up artist to the stars, then things might be different!
If you are an employee thinking of changing jobs and you are concerned about the restrictive covenants in your contract then we can help. If you are an employer who is facing a potentially damaging employee move then we can advise on whether you can (and equally importantly whether you should) seek to enforce their restrictive covenants.
At Backhouse Solicitors our specialist employment solicitors regularly advise both employers and employees on restrictive covenants and injunctions. Contact us today for a free 30 minute consultation to find out how we can help.
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