High Court adds words into non-compete covenant

By Alex Newborough

Employers can seek to protect their businesses from ex-employees through the use of restrictive covenants. Careful drafting is usually required for such covenants to be enforceable, although this case (Prophet plc v Huggett) provides the exception to the rule.

To be enforceable, restrictive covenants must (at the time at which they are entered into) go no further than is reasonably necessary to protect the legitimate business interests of the employer in the particular circumstances. Therefore, restrictive covenants will usually include appropriate limitations in terms of time, scope and geographical reach.

In particular, employers face difficulties in justifying non-compete covenants that prevent employees working for competitors unless these are designed to protect trade secrets or confidential information and such protection cannot be adequately achieved by less far-reaching restrictions such as non-dealing and/or non-solicitation covenants…

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