Penningtons Manches

UK 200 2013 position: 90

Restrictive covenants: should they be affirmed on termination?

A common refrain these days is the rather blasé ‘covenants aren’t enforceable’. Not so. Covenants naturally come to the fore on termination and it is worth knowing that employers can benefit from getting employees to affirm existing restrictive covenants when they leave employment.

A recent case indicates that by getting the employee to affirm their employment contract covenants when they leave under a settlement agreement, the employee will then have the burden in court of establishing why the covenants should not be enforceable. This is a significant improvement for employers, where the usual position is that in enforcement proceedings they have to prove why covenants should not be unenforceable.

In Capgemini India Private Ltd and another v Krishnan and others, former employees of Capgemini were asked to reaffirm their non-competition restrictive covenants in an undertaking on termination. The employees then sought to withdraw the undertaking when it became clear that a competitor would be willing to cover any legal costs incurred as a consequence of breach…

Click on the link below to read the rest of the Pennington Manches briefing.

Overview

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