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When Will the High Court Grant an Interim Injunction for Breach of Restrictive Covenants?

on Friday, 19 October 2018.

The High Court of Justice in Berry Recruitment Limited v Brooke Donovan (2018) reviewed the grounds upon which the court was prepared to grant an interim injunction to prevent an employee from breaching...

...post-termination restrictive covenants contained in the contract of employment.

The Facts

Berry Recruitment (Berry) are in business as a recruitment agency. Brooke Donovan had been employed as a recruitment consultant between September 2016 until June 2018 when she resigned to take up new employment with Swan Staff Recruitment Limited.

Ms Donovan gave one month's notice to Berry in accordance with her contract of employment informing it that she had been offered new employment which she wished to start as soon as possible and requested to be released from working her full notice period. The parties therefore agreed that Ms Donovan's employment would end on 1 June 2018.

Ms Donovan's contract of employment contained restrictive covenants that prevented her for a period of six months from the termination of her employment from:

  • soliciting or enticing away from Berry any "restricted customer or restricted candidate" with a view to providing them with recruitment services in competition with Berry
  • dealing with such "restricted customers and restricted candidates" in the course of any employment which was in competition with Berry

Berry was able to produce evidence that showed Ms Donovan had contacted candidates who had been placed by Berry with a view to passing them to her new employer and furthermore informed those candidates that their placements (arranged by Berry) had ended.

Berry made an application to the court for an interim injunction to prevent Ms Donovan from continuing to breach the non-solicitation and non-dealing provisions contained in her contract of employment.

The Law

When considering whether to grant an interim injunction, the court had to apply a three limb test:

  1. Whether there was a serious question to be tried.
  2. Whether damages are an adequate remedy.
  3. Where did the balance of convenience lie as to whether or not an injunction should be granted?

In assessing ground one, on the facts of this case there was evidence that Ms Donovan had contacted Berry's clients and candidates and interfered generally with its business. There was, therefore, a serious question to be tried.

As to ground two, in view of the substantial evidence Berry was able to provide in support of its case, the court held that damages would not be an adequate remedy in these circumstances. Not only was there evidence that Ms Donovan was breaching the restrictive covenants, there was also a strong inference that she was misusing confidential information.

Finally as to the third limb of the test, the court bore in mind that Berry was not seeking to prevent Ms Donovan from continuing at her new employment but only to enforce the time limited restrictive covenants and to prevent misuse of confidential information. On the facts the court held that the balance of convenience in these circumstances fell in favour of granting the interim injunction sought.

Best Practice

Employers should review their contracts of employment and in particular ascertain whether they have adequate protection in the form of relevant restrictive covenants which should be reasonable in terms of scope and duration according to the specific employment relationship as well as dealing with social media communications.

Employers should also be prepared to take action where necessary to protect confidential information, existing business and business relationships. Where key staff have given notice to leave an organisation, employers should consider the commercial consequences of permitting staff to work notice as opposed to placing them on garden leave if the contract allows.

Above all there is a need to act quickly where wrongdoing is discovered so as to limit the damage being caused by former employees.

For further information, please contact Michael Delaney in our Employment Law team on 01923 919 316.

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