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Be careful with your covenants

17 February 2012

Non solicitation clauses are commonplace in senior employees’ employment contracts. But how can an employer show that an employee has ‘solicited’ its clients? In the case of Towry EJ Limited v Barry Bennett and others, the employer was not able to show that their former clients had moved to a former employee’s current business due to any request, persuasion or encouragement by that former employee. Solicitation could not be inferred from the fact that a “tidal wave” of clients had moved to the former employee’s business, even though that might well look suspicious.

With the burden of proof lying squarely with the employer in trying to enforce restrictive covenants, careful consideration needs to be given to their drafting at the outset. A non-dealing clause may have proved more effective in this case with the employee being placed on garden leave to prevent them from having contact with key clients during their notice period.

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