High Court Declines to Enforce Non-Compete Clause for Senior Trader on Sick Leave
In a recent ruling, the High Court declined to enforce a non-compete clause for a senior trader who had been on sick leave during their 12-month notice period. This case, Dare International Ltd v. Stephen Soliman (SS) and Ashley Hikmet (AH), provides valuable insights into how courts handle post-termination restrictive covenants (PTRs), especially when an employee has been absent from work for a significant period.
Case Overview
SS and AH resigned from Dare in late 2023 and early 2024, respectively, with 12-month notice periods. Both were required to work during their notice periods but were signed off sick shortly after resigning. Dare alleged their sickness absences were a ruse to avoid working their notice periods and terminated their employment, paying them in lieu of notice.
Dare sought damages for breach of contract and fiduciary duty, and injunctive relief to enforce PTRs against two former senior traders, SS and AH. Both traders had accepted positions with a competitor in Dubai.
SS and AH argued that Dare had no legitimate business interests to protect and that the PTRs were too broad. Alternatively, they contended that if the PTRs were enforceable, the court should refuse an injunction because Dare had already benefited from their absence.
Court’s Decision
- Enforceability of PTRs:The court found the 12-month non-compete clause reasonable for protecting Dare’s business interests but deemed the non-solicit, non-deal, and non-poach restrictions too long.
- Injunctive Relief:The court refused to grant an injunction against SS, noting that Dare had already enjoyed protection during SS’s sickness absence. However, the court granted an injunction against AH, as his absence was not genuinely due to sickness, and he had breached his contract by preparing to work for the new Company and disclosing confidential information.
Conclusion
PTRs are closely scrutinised by the Courts to ensure they are reasonable and necessary to protect legitimate business interests. The enforceability of PTRs hinges on several factors, including the duration, geographic scope, and the specific role of the employee. Any ambiguity or overly broad restrictions can render a PTR void.
If you are an employer or employee affected by the above issue and want advice or support in connection with the same, or any employment law or HR issues more generally, please do not hesitate to contact us on 01206 239761.
