Russ & Co v Robertson 2011 AER 36
Mr Robertson was employed by Russ as an estate agent in 2006 initially for a trial period. He successfully completed that and was taken on as a permanent employee. He failed however at that time to sign certain added terms of employment, which included anti-soliciting and an area covenant which would apply following the termination of his employment. The area covenant prevented him from setting up an estate agents business for 12 months following his termination within a 5 mile radius of Russ’ business.
In 2011 Mr Robertson handed in his notice and sought to establish an estate agent’s business 1.5 miles away. Russ brought a claim seeking to enforce the additional terms of the contract of employment and an injunction to prevent Mr Robertson from using confidential information. Mr Robertson maintained that he had never signed the additional terms and that he could not be bound by them, or if they were incorporated he was not in breach and in any event the area covenant was too wide and void.
The Court held that the terms had been incorporated as part of his contract of employment and that he had been in breach of his restrictions concerning confidential information. The area covenant was reasonable in terms of geography but it was for too long a period and it went further than protecting the legitimate business interests of Russ. As Russ’ legitimate business interests could be adequately protected by restrictions on confidential information and the anti-solicitation clauses Mr Robertson’s business could continue subject to an injunction restricting his use of the confidential information obtained during his time employed Russ’ business.
Key point: Care should be taken when drafting area covenants. If too wide they could be in restraint of trade and void. An appropriately worded confidentiality clause may be more useful.