Winckworth Sherwood

UK 200 2013 position: 94

Restrictive covenant in an undertaking

The employees’ contracts of employment with C contained restrictive covenants prohibiting them, for six months after the termination of their employment, from dealing with any existing customer of C, with which they had either business dealings or whose confidential or commercially sensitive information they had access to in the last six months of their employment.

During their employment, the employees worked on a credit card processing contract for C. In August 2013, C lost that contract to a competitor. The employees resigned from C on notice, joined the competitor, and resumed work on the same credit card processing contract.

In January 2014, C wrote to the employees asserting they were in breach of their restrictive covenants and asked for undertakings (written promises) from the employees to the effect that they would abide by their restrictive covenants, otherwise C would seek an injunction. After taking legal advice, the employees gave the undertakings so as to avoid the financial risk of legal proceedings…

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