{"id":774,"date":"2016-05-05T09:46:41","date_gmt":"2016-05-05T08:46:41","guid":{"rendered":"http:\/\/www.recruitment-connection.co.uk\/?p=774"},"modified":"2016-05-05T09:46:42","modified_gmt":"2016-05-05T08:46:42","slug":"legal-news-damages-for-breach-of-restrictive-covenant","status":"publish","type":"post","link":"https:\/\/www.recruitment-connection.co.uk\/index.php\/2016\/05\/legal-news-damages-for-breach-of-restrictive-covenant\/","title":{"rendered":"Legal News – Damages for breach of restrictive covenant"},"content":{"rendered":"

\"Employment<\/a><\/p>\n

In Morris-Garner v One Step, the defendants were the founding director of a company and her partner. \u00a0The company had been founded in 2002, but in 2006, in secret, the defendants incorporated another company. They then resigned from their positions with the original company and agreed to non-compete and non-solicit restrictive covenants. \u00a0The new company began trading in 2007, an\u200bd in 2012 the original company sued for breach of the restrictive covenants.<\/p>\n

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The starting point with any restrictive covenant is that they are unenforceable as they restrain the employee\u2019s right to trade. \u00a0However, if they are drafted no more widely than necessary for the purpose of protecting the employer\u2019s trade secrets and confidential information, connections with clients or stability of the workforce, they may be enforceable. \u00a0The more senior the employee, the more likely are the courts to consider the covenant reasonable. We were reminded in March this year of courts\u2019 unwillingness to enforce such terms (Bartholomews Agri Food v Michael Thornton); an interesting feature of that case was that even if the restrictive covenant had been reasonable when the employee resigned and started working for a competitor, it had been totally unreasonable when agreed 18 years previously at the start of his employment as a trainee in the field. \u00a0An action point from that is that the employer would be wise to review its contracts occasionally.<\/div>\n
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In Morris-Garner v One Step, the first defendant didn\u2019t even argue in the High Court that the covenant was unenforceable. \u00a0Her partner did, claiming she was a mere employee \u2013 the court gave that short shrift, as it was clear that the reason for the agreement was that she was the first defendant\u2019s civil partner and later her business partner.<\/div>\n
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The reason why this case is interesting, and useful for employers, is the remedy awarded by the court. \u00a0It would have been inherently difficult to identify any particular loss suffered by the company on account of the breaches of the restrictive covenants, so the court awarded what is called (after the principal case on the matter) \u201cWrotham Park damages\u201d: the amount which the company might reasonably have demanded for releasing the defendants from the restrictive covenants before they began in competition. \u00a0Wrotham Park damages had been seen as a highly exceptional remedy. \u00a0This case has blown away that exceptionality requirement.<\/div>\n
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Employers should take care with restrictive covenant, especially in the drafting. \u00a0But as this case shows, employers need not forget about them entirely, and if breached there may be useful remedies.<\/div>\n","protected":false},"excerpt":{"rendered":"

In Morris-Garner v One Step, the defendants were the founding director of a company and her partner. \u00a0The company had been founded in 2002, but in 2006, in secret, the defendants incorporated another company. They then resigned from their positions with the original company and agreed to non-compete and non-solicit restrictive covenants. \u00a0The new company began trading in 2007, an\u200bd in 2012 the original company sued for breach of the restrictive covenants. The starting point with any restrictive covenant is that they are unenforceable as they restrain the employee\u2019s right to trade. \u00a0However, if they are drafted no more widely… <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"twitterCardType":"summary","cardImageID":0,"cardImage":"","cardTitle":"","cardDesc":"","cardImageAlt":"","cardPlayer":"","cardPlayerWidth":0,"cardPlayerHeight":0,"cardPlayerStream":"","cardPlayerCodec":"","footnotes":""},"categories":[43],"tags":[121,157],"class_list":["post-774","post","type-post","status-publish","format-standard","hentry","category-employment-law","tag-employment-law","tag-recruitment-legal-news"],"_links":{"self":[{"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/774","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=774"}],"version-history":[{"count":3,"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/774\/revisions"}],"predecessor-version":[{"id":779,"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/774\/revisions\/779"}],"wp:attachment":[{"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=774"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=774"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.recruitment-connection.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=774"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}