In Tullett Prebon Group Limited v Ghaleb el-Hajjali, Mr El-Hajjali, a senior speciality variance swaps broker, having gone through a vigorous and time-consuming recruitment process, accepted an offer of employment with Tullett. He changed his mind shortly after signing his contract of employment. Based on a clause in the contract that required Mr El-Hajjali to pay a specified amount if he did not start work (a “no show” clause), Tullett brought a claim against Mr El-Hajjali in the High Court for liquidated damages for breach of contract. The High Court upheld Tullett’s claim ruling that Mr El-Hajjali was liable to pay the amount due under the clause. In reaching its decision, the High Court made clear that certain criteria must be met if a clause such as this is to be valid rather than an unlawful “penalty clause”. In particular, both parties must have equality of bargaining power and should be legally represented. Further, the level of damages stipulated must represent a genuine pre-estimate of the likely costs incurred by the employer in the event of the employee’s default and not be an arbitrary penalty amount that is extravagant or unconscionable. Employers recruiting senior specialist employees who they believe may get cold feet should take legal advice to ensure their position is adequately protected.