Egon Zehnder Ltd v Mary Caroline Tillman [2017] EWHC 1278 (Ch)

The High Court has reviewed the principles for assessing whether a non-compete clause was necessary in order to protect legitimate business interests, and has set out guidance when establishing the validity of the non-compete clause.

In 2004, Egon Zehnder, a global executive search and recruitment company, employed Mrs Tillman, the defendant, as a consultant in its financial services group. Mrs Tillman had previously worked as a successful investment banker and was rapidly promoted to Partner in 2009 and co-Global head of the Financial Services Practice Group in 2012. However, she did not sign any new employment contracts throughout this period. Her existing contract contained a restrictive covenant which intended to restrain Mrs Tillman from working for a competitor of Egon Zehnder for a period of six months from the termination of her employment.

When Mrs Tillman's employment ended in 2017, she informed Egon Zehnder that she intended to work for an American firm in a similar area of business. Egon Zehnder sought an injunction based on the non-compete clause in Mrs Tillman's contract. She argued that the clause was void for being wider than reasonably necessary for the protection of Egon Zehnder's business interests, particularly in light of her original duties as a junior consultant and the principle that the reasonableness of a covenant should be judged on the circumstances that existed at the time into which the contract was entered.

The High Court upheld the covenant, accepting that Egon Zehnder did have legitimate business interests to protect as a result of Mrs Tillman's strong client connections and unique access to confidential information. The High Court noted the Defendant had been identified as a future star when she was recruited and was considered to be a “bit special” in that she had greater client involvement and made more sophisticated contributions to the organisation’s strategy than a typical consultant.

The case is somewhat unusual and turned on its particular facts. Employers should certainly not assume that an onerous non-compete imposed on a junior member of staff will be enforceable many years later. However, it does show that covenants, which may on their face appear unreasonable, can be justifiable in specific circumstances. Employers should continue to ensure that restrictive covenants are tailored to a role/person and updated as appropriate to reflect changing circumstances.