Enforcing Non-Compete Provisions – Some Practical Thoughts for HR

Enforcing Non-Compete Provisions – Some Practical Thoughts for HR

30th October 2013

This is the first instalment of a 12-part series we will publish over the next year of our newsletters.

In it, we explore the practical aspects of trying to enforce non-compete covenants, which all HR practitioners should know.

Point No. 1: in practice, injunctions to enforce non-competition clauses are difficult to obtain.

Most courts (whether in the UK or elsewhere) take the view that an individual’s right to earn a living borders on sacrosanct, and that there is also nothing wrong with a dose of healthy competition.

Consequently, the general position is that it is not in the interests of society for employers to have a carte blanche to bar departing staff from working elsewhere after they have left. To give effect to this principle, courts will tend to only enforce non-compete covenants in very limited circumstances. And judges have a wide discretion in any particular case as to whether or not a particular covenant should be enforced or not.

For example, UK courts will only enforce a non-compete provision if they can be convinced that the restriction is necessary to protect the business’ legitimate interests. Aside from anything else, judges will ask why the business can’t be adequately protected by less draconian covenants – such as a general confidentiality agreement or a non-solicitation-of-customers agreements.

This sometimes comes as a surprise to business managers, who often have the (understandable, but wrong) view that any non-compete clause contained in a contract is binding, just like other contractual provisions. Sadly, that is not the case – and unfortunately it falls to HR and their legal advisers to break the bad news.