Non-solicitation covenant may apply to all customers
In Safetynet Security Ltd v Coppage the High Court considered the wording of a non-solicitation covenant which prevented the Defendant (the Business Development Director of the claimant company) for six months after termination of his employment, from approaching ‘any individual or organisation who has during your period of employment been a customer of ours’.
The defendant argued that this wording was too wide. To be enforceable, the restriction should have been confined to customers with whom he had had dealings over the last 12 months of his employment. Normally one might expect such an argument to succeed. However, in this case, the court heard that the claimant company was a small business and the claimant, as business development director and “the face” of the claimant company, had contact with all the customers. The covenant was upheld.
Point to note –
- The judge in this case went on to tell the defendant director that, even if the restrictive covenant had been too widely drawn to be enforceable, he could still have been prevented from stealing business from his ex-employer. As a company director, he was bound by s170(2) of the Companies Act 2006. This states that a director continues to be subject to duty to avoid conflicts of interest with the company as regards the exploitation of any information or opportunity of which he became aware at the time when he was director – in this case, soliciting business from those who he knew to be customers of the company. Company directors must always be reminded that their obligations as directors may extend beyond what is written in their service agreements.
Other cases on the employment case law update for September 2012:
> Constructive dismissal: Roberts v Whitecross School
> Constructive dismissal: Assamoi v Spirit Pub Co
> Redundancy: Wrexham Golf Club v Ingham
> TUPE / UNFAIR DISMISSAL: F&G Cleaners v Saddington