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26 June 2013 0 Comments
Posted in Employment, Opinion

Constructive dismissal and restrictive covenants

Author headshot image Posted by , Partner

In a case which will continue the ongoing debate sparked by Société Generale v Geys (reported in a recent edition of the Update), the High Court has given judgement on the question of restrictive covenants and an injunction application in Romero Insurance Brokers v Templeton. The employee’s contract included a clause precluding him, for a period of 12 months following termination, from procuring orders from or doing business with a client of the employer’s with whom he had dealt within the last 6 months of his employment. Having reviewed the case law on protecting business interests, the High Court held that the covenant was necessary in the context of the insurance industry, where renewals usually take place annually. Consequently the Court granted the injunction to enforce the covenant.

This decision was based in part on the failure of the employee in contending he had been constructively dismissed. The judgement does not expressly state that an employer who had repudiated an employee’s contract cannot enforce the restrictive covenants within the contract but it did hint that this might be the case.

This legal update is provided for general information purposes only and should not be applied to specific circumstances without prior consultation with us.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.

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