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Non-Competition Clause Reasonable

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

A company director who lured customers away from his former employer after he had resigned from his post has been ordered to pay £50,000 in damages for breach of a non-solicitation clause in his employment contract.

The defendant was employed as business development director of Safetynet Security Ltd. (Safetynet), a medium-sized company providing security guards and door supervisors to pubs and clubs, until his resignation in April 2012. The day after he resigned by email, a rival security company – Freedom Security Solutions Ltd. (Freedom) – was incorporated. Within 12 days of the defendant’s departure, five of Safetynet’s customers had terminated their relationships with the company.

The High Court ruled that a non-solicitation clause in the defendant’s employment contract – which restrained him from approaching Safetynet’s customers for six months following the termination of his employment – was ‘reasonable and wholly enforceable’.

Finding the defendant in breach of the non-solicitation clause, the judge ruled that he was ‘the controlling mind/de facto director’ of Freedom. He rejected the defendant’s plea that Safetynet had been in repudiatory breach of his employment contract prior to his resignation.

The defendant and Freedom were ruled jointly liable to pay Safetynet £50,000 in damages as compensation for the loss of revenue the company suffered due to the solicitation of its customers.

If a former employee of your business is approaching your customers in breach of his or her contract, or you wish to ensure such a situation does not occur, contact Gary Lee.

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