Post termination restrictions on trade
In the ‘information age’, may employees’ relationships with clients be covered by restrictive covenants?
Yes, the High Court decided in the case of East England Schools v Palmer.
This case centred on an employee of an education-sector recruitment consultancy, within whose contract of employment was a restrictive covenant. This covenant prohibited her from soliciting or dealing with the candidate teachers or client schools with whom she had dealt in her last 12 months, for a period of 6 months after the end of her employment. After her employment terminated, the (former) employer sought to enforce this covenant. This is quite a common type of restriction.
The court decided that the employer required protection because it was central to the employee’s role that she was to build relationships with client recruiters and candidates. A good, trusting relationship could make the difference between otherwise equal consultancies in a highly competitive marketplace. In addition, such employees would be privy to certain important information which was not publicly available, even if much other information was. so it was decided that these factors warranted protection.