Non-compete clauses, injunctions and breach of covenants

Senior executive employment contracts are usually different from non-executive employment contracts in that they generally include restrictive covenants – often referred to as post-termination restrictions or non-compete clauses. Not surprisingly, both employer and employee desire certain protections and, unlike a non-executive employment contract, both parties have bargaining power.

Support for senior executives

As Penningtons Manches Cooper acts for senior executives and employers, we can provide a 360-degree perspective on employment contracts. Our employment lawyers specialise in advising senior executives on how to navigate and resolve the complex area of restrictive covenants within their contracts to protect their reputation and future career prospects.

Most senior executive employment contracts contain restrictive covenants that attempt to constrain the employee’s ability to compete with their former employer after they have joined a new organisation. Covenants commonly prevent solicitation of or dealing with former customers, interference with suppliers, poaching colleagues or working for a competitor for a defined period of time. Disputes over the scope and enforceability of such post-termination restrictions are frequent and can often lead to expensive litigation for both employer and employee.

If your former employer believes that you have breached or are about to breach a restrictive covenant, they may commence court proceedings against you which may include seeking an injunction to prevent the breach. However, before commencing injunctive proceedings, it is usual for an employer to have their lawyer write to you requesting undertakings to avoid a claim for an injunction. If you receive such a letter, you should seek expert legal advice immediately.

The team have a holistic approach to giving advice and providing support. They have a strategic and empathetic approach to problem solving.

We can advise on the enforceability of non-compete provisions and other post-termination restrictions and provide pragmatic guidance for senior employees on how to approach such restrictions, including negotiating their scope, agreeing on undertakings and, where necessary, defending injunction proceedings. We also frequently advise senior executives on the redrafting and negotiation of restrictive covenants when joining a new employer to ensure any future moves are not put in jeopardy.

Our employment lawyers work seamlessly with experts in the firm’s other practice areas and we regularly draw on the specialist knowledge of our commercial dispute resolution team who have extensive experience in High Court procedures. All our clients value our expertise in navigating these challenging situations, advising on the best strategy and providing legal and commercially focused advice from start to finish.

How we help our clients

Enforceability of ‘non-compete’ clauses and other post-termination restrictions

Strategy and planning to avoid allegations of breach of restrictive covenants

Dealing with threats of High Court action including injunction proceedings

Defending injunction proceedings

Negotiating undertakings and settlement terms

They provide an exceptional level of support and advice, relating to some very complex employment law matters.

Fully flexible, informative and professional in all of their dealings.

Recent work highlights

Release of restrictive covenants

Representing a senior member of a listed financial institution in relation to a contested exit, including the release of restrictive covenants enabling them to commence work with a deemed competitor.

Senior partner team move

Acting for a senior partner in an investment services company on a strategic team move, negotiating a release from post-termination restrictions and developing a positive client narrative to support the launch of a competing joint venture with a multi-national rival.

Post termination restrictions advice on exit

Advising a client on their exit from an investment company after over 10 years of service, ensuring they preserved a right to move to a competitor firm while not infringing the terms of the equity documents and post termination restrictions.

Professional services executive exit

Advising a senior executive client on their legal, commercial and reputational position in connection with their non-compete restrictions when leaving for a competitor, resisting threats of enforcement of non-compete restrictions including injunctive proceedings.

Removal of confidential information and breach of covenant claims

Representing two senior executives who had joined our client from competitor firms which threatened to sue them for removing confidential information and breaching their post-termination restrictions. We were able to determine that no information had been taken and the post-termination restrictions were invalid and not enforceable.

Duties of fidelity, trust and confidence

Advising our client in a complex High Court claim by his former employer for breach of post-termination restrictive covenants (competition, solicitation and non-dealing), unlawful removal of confidential information and springboard relief.