An employer may be able to enforce a "no show" clause requiring a prospective employee to pay an agreed sum if he fails to start his new employment, provided the purpose of the clause is to compensate loss rather than deter breach.
Employers wishing to use such clauses should genuinely attempt to estimate the likely losses and preferably discuss this with the employee.
The employer here had compared the likely revenue of the prospective employee with the cost of employing him and had thought about whether amending the clause would make it an unenforceable penalty. The court thought this was sufficient consideration of the matter given that the loss was difficult to assess.
The court was also influenced by the fact that the employee had equal bargaining power in negotiating the contract and had received legal advice.
The fact that the agreed sum was much smaller than the actual loss did not make it an unenforceable penalty. (Tullett Prebon v Ghaleb El-Hajjali)