Decision: The High Court held that a restrictive  covenant which sought to prevent a former employee  from working for a competitor for six months following  the end of his notice period was not enforceable. The  covenant was too widely drawn and went beyond  protecting the legitimate business interests of the  employer. It was therefore in restraint of trade. In  reaching this decision, the Court also held that the  employee was not on garden leave during his notice  period, with the result that a provision in the contract  allowing the period of restraint to be reduced by time  spent on garden leave did not apply. 

Impact: The temptation when drafting a non-competition clause might be to ensure that it is as  comprehensive as possible. This case illustrates that  this approach may lead to a clause that cannot be  enforced at all by the employer. When drafting noncompete restrictive covenants, clauses should focus on  activities which would involve the employee directly  competing with their old employer. By being drafted  more widely than that, as was the case here, an  employer risks rendering a non-compete restrictive  covenant useless (although it may still be possible to  rely on various non-solicitation and confidentiality  clauses).  

It is a relatively common contractual term to allow an  employer to put an employee on garden leave or to give  them alternative roles or alternative work during a notice  period.  Employers are generally well aware that they  cannot give an employee manifestly unsuitable or demeaning work as an alternative to garden leave. However, it  would be a worrying trend if courts were to start finding  that restrictive covenants, which apply in respect of areas of  business undertaken by an employee during the last twelve  months of employment, are rendered invalid because an  employee can be asked to work in a different area of the  business during the notice period.  Although this case does  not go this far, it may be that arguments along these lines  are developed in subsequent cases.

Ashcourt Rowan Financial Planning Limited v Hall