High Court decides on enforceability of 12-month non-competition restriction

High Court decides on enforceability of 12-month non-competition restriction

The High Court has held that a 12-month non-competition post-termination restrictive covenant in an agreement between a financial adviser and his employer was enforceable. Under a “goodwill agreement”, the financial adviser had been paid for the goodwill in the client base he brought with him to the firm, but was prevented from working in any capacity in competition with his employer for 12 months after his employment terminated. The court held that the non-competition restriction was enforceable because the goodwill agreement was akin to a business sale agreement into which the parties had entered with equal bargaining power. It ordered the financial adviser to pay damages for the employer’s loss of profit for two years after his departure. This decision is a good reminder that courts are more likely to enforce post-termination restrictions in business agreements than in employment contracts.

(Merlin Financial Consultants Ltd v Cooper [2014] EWHC 1196 (QB))

Back to legal updates