Enforcing covenants when the business moves with the employee

Decision: An employee was not in breach of a non-compete clause contained in his employment contract because his employer was no longer carrying on the area of work he had done. The employee was the only one who did it and the employer was not looking to recruit a replacement. So, due to the way the covenant was drafted, the employee was not ‘competing’.

Impact: Although this was a clear case on its facts, it will be of concern for employers who lose a ‘star’ employee and their team, who together make up all those working in a particular area. As always, the drafting of the covenants is key. They should cover the period whilst in employment as well as after termination. That way, any breaches of contract before the employee left will be caught.

Threlfall v ECD Insight

12 month covenant enforceable against an insurance broker

Decision:A 12 month restrictive covenant has been upheld by the High Court in a case involving an insurance broker. The clause, which prevented solicitation and dealing with clients that the employee had worked with prior to leaving, was enforceable in the insurance market due to the annual renewal cycle for clients.

Impact: It has often been thought likely that a 12 month covenant should be justifiable in the insurance sector due to the annual nature of renewals and this is a helpful case to provide support to that argument.

Romero Insurance Brokers v Templeton

Legal representation at disciplinary hearings

Decision: A District Probate Registrar was dismissed after a final written warning and was denied legal representation at the appeal hearing. The employee claimed that this was a breach of Article 6 of the European Convention on Human Rights, i.e. the right to a fair hearing. The court said that this was unlikely to be the case, unless the dismissal itself prevented the employee from working again in their profession.

Impact: This case confirms that the right to legal representation at internal hearings is unlikely to arise very often. Article 6 rights will only be engaged if the hearing will determine the employee’s right to practise his or her profession. In most cases, that decision will be for a separate professional governing body.

Ministry of Justice v Parry

Employment Tribunal changes

A number of changes are being made to employment tribunal procedures, the majority of which will come into force on 29 July 2013. Key changes to be aware of are:

  • Claimants will have to pay a fee to bring a tribunal claim – one fee to issue the claim and another prior to the hearing.
  • New rules of procedure include an initial paper sift of claims by Employment Judges and the combination of case management discussions and pre-hearing reviews into a single preliminary hearing.
  • Tribunals will have the power to award costs to claimants who represent themselves, for their preparation time and for witness expenses.