Tradition Financial Services v (1) Gamberoni (2) Spectron Services Limited (3) Marex Spectron Group Limited [2017] EWHC 768 (QB)

The High Court has held that a post-termination clause restricting a junior broker from working for a competitor for six months was valid even if the Claimant had already been placed on garden leave for the preceding three months.

Mr Gamberoni was a junior inter-dealer broker working in the energy market. His employment contract with Tradition Financial Services contained a six-month non-compete clause, which could not be set off against time spent on garden leave unless the garden leave exceeded three months.

When he handed in his resignation, Mr Gamberoni was placed on back-office duties for his three-month notice period, instead of on garden leave. Three months after leaving his employment, Mr Gamberoni commenced employment with Spectron Services Limited, a competitor of his former employer. Tradition Financial Services applied for an injunction from the High Court, claiming that Mr Gamberoni was still bound by the non-compete clause.

The court held that the clause was valid. Mr Gamberoni was well paid despite his junior position, with a large client base which Tradition was entitled to seek to protect; and the length of the non-compete clause was not unusual in his industry. Although he only had three years' experience in the field, the judgment held that Mr Gamberoni was both educated and experienced enough to appreciate the implications of the covenants when he signed his contract of employment.

In applying the usual test for determining the validity of restrictive covenants, the court held:

(i) there was a legitimate business interest requiring protection, as non-compete provisions are necessary in an industry where less-restrictive covenants are hard to police; (ii) the duration of the restriction was no wider than reasonably necessary, as a non-compete clause from six to twelve months is not excessive for a broker regardless of experience; and (iii) the breadth of the clause was no wider than reasonably necessary, as client confidentiality is only protected if the individual is prevented from working back-office jobs as well as brokering.

Despite the pro-employer outcome of this case, employers should maintain caution when drafting restrictive covenants, ensuring that they are drafted reasonably to reflect industry norms.