Tag Archives: business protection

ILN Today Post

Legitimate business protection or unenforceable restraint of trade – the problem with post-termination restrictions

Michael McCartney comments on a recent Court of Appeal decision in Egon Zehnder v Tillman highlighting the challenge employers face when enforcing clauses designed to prevent competition from employees after they leave.

The Court of Appeal held that a non-compete restriction which purported to prevent Ms Tillman from having an “interest” in a competing business was too broad to be enforced. The restriction would have prevented her from holding any shares at all in a competitor, regardless of their value. This position was at odds with her contractual right during her employment to hold a limited number of shares up to a maximum of 5%. There was clearly no basis upon which Egon Zehnder could possibly justify a more stringent protection after employment than had existed during it.

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