Posted by Richard Woodman, Partner
On 1 September 2016 Withy King LLP merged with Royds LLP. The trading name for the merged firm is Royds Withy King. All content produced prior to this date will remain in the name of the firms pre-merger.
12 month non-compete enforceable against financial adviser
In Merlin Financial Consultants Limited v Cooper, the High Court has held that a 12 month non-competition post-termination restrictive covenant in the contract of a financial adviser was enforceable. The financial adviser had been paid for the goodwill in the client base which he brought with him to the firm under a “goodwill agreement” but was prevented from working in any capacity in competition with its employer for 12 months after the termination of his employment.
The Court held that the non-compete restriction was enforceable because the goodwill agreement was akin to a business sale agreement into which the parties had entered with equal bargaining power. He also noted that 12 month post termination restrictions were common in the financial services industry and were reasonable where there was an exceptionally strong relationship between the employee and their clients.
The employee’s argument that the employer had failed to mitigate its loss by not putting him on garden leave or seeking injunctive relief failed. The Court came to the decision that a claim for breach of contract was appropriate in these circumstances where the employer did not wish to cause further damage to the client relationships. The financial adviser was ordered to pay damages for the employer’s loss of profits for a full two years following his departure
It pays to employ the right employment solicitor