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Egon Zehnder Ltd v Tillman: Supreme Court To Hear Case Regarding Non-Compete Clause

On the 21st & 22nd January 2019, the Supreme Court will hear the appeal in the case of Egon Zehnder Ltd v Tillman [2017] EWHC 1278 (Ch). The case concerns the enforceability of a non-compete clause contained within the restrictive covenants section of an employees contract of employment, in terms of whether or not the scope of the non-compete clause is too wide.

Egon Zehnder Ltd v Tillman

As we highlighted back in a previous article, the Court of Appeal ruled in the case of Egon Zehnder Ltd v Tillman that that the non-compete clause that was contained in the restrictive covenants section of the employees (Mary Caroline Tillman) contract of employment was too wide. The relevant section of the non-compete clause stated: “13.2 You shall not without the prior written consent of the Company directly or indirectly, either alone or jointly with or on behalf of any third party and whether as principal, manager, employee, contractor, consultant, agent or otherwise howsoever at any time within the period of six months from the Termination Date………13.2.3 directly or indirectly engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which were carried on at the Termination Date or during such period.” The Court of Appeal held that on the basis that the words “interested in” would include the holding of a minor shareholding in a competitors company, that the scope and ambit of the non-compete clause went beyond what was required to protect the employers legitimate business interests, and so on that basis rendered the non-compete clause as a whole void and unenforceable.

Egon Zehnder Ltd have appealed the decision of the Court of Appeal, and the Supreme Court will hear the appeal on the 21st & 22nd January 2019.

Care Required When Drafting A Non-Compete Clause

Regardless of whether the Supreme Court upholds the decision of the Court of Appeal in the case of Egon Zehnder Ltd v Tillman or not, this case only goes to reinforce the fact that those responsible for drafting the contract of employment, and the restrictive covenants contained within them, need to take great care to ensure that the provisions contained in any non-compete clause are not drafted too widely, and that the restrictions imposed are no greater than what is required to protect the legitimate business interests of the employer.

Posted in General Employment Law, Non-Compete Clauses, Restrictive Covenants and tagged , , .