The employee in Egon Zehnder Ltd v Tillman worked as a executive search consultant. She held a very senior role in the business, having been promoted on a number of occasions since her initial appointment. Her contract of employment, which had not been amended since she started employment, contained a six month non-compete clause. The clause prevented her from competing with any group company business with which she was "materially concerned" in the 12 months before she left. She wanted to start work with a competitor three months after her termination date; the employer applied to the court for an injunction to restrain her.
The High Court decided that the covenant was enforceable. It was no wider than reasonably necessary to protect the employer's legitimate interest (confidential information and client connections) and a non-compete clause was reasonable, given the difficulties of policing non-dealing, non-solicitation and confidentiality provisions. In particular:
- The reasonableness of the covenant had to be construed by reference to her position when she joined the business, not the very senior position she had subsequently attained. However, when she joined the business she already had extensive experience and seniority in the financial services industry, so she was given more responsibility, client engagement and input to business strategy than would be usual for someone joining at that level. On that basis, the covenant was not too wide and six months was a reasonable period of restraint, allowing for the substitution of new relationships and the fading of confidentiality.
- Although the covenant did not contain an express territorial limitation, it was confined to businesses in which the employee was "materially concerned". That was an in-built restriction on the global reach of the clause, deriving from the need for the employee to have been involved locally.
- The prohibition on being "interested in" a competitor could not be construed as prohibiting a minor shareholding in a competitor (which would make it too wide to be enforceable), given that other provisions in the contract allowed her to hold shares in another company during employment.
- Although there was evidence that many consultants (especially those based outside the UK) did not have non-compete restrictions and that non-compete restrictions had not been enforced in the past, the contract reflected the norm in UK employee terms and the employer was entitled to deal with each case on its merits, assessing whether litigation was profitable and justified in a particular situation. Bearing in mind the employee's enhanced value, it was understandable why the employer might choose to make an exception and enforce.