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Restrictive Covenant Binding on Top Recruitment Consultant

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

Senior employees know the intimate details of the companies they work for and their departure to a competitor’s fold can be a disaster. However, a High Court case showed that professionally drafted contractual restrictions on what they can and cannot do after they leave can be highly effective in softening the blow.

The case concerned a woman who had performed a lynchpin role in an international recruitment company. She was viewed as a valuable addition to the team when she joined the company and was paid commensurately. However, after 13 years with the company, she announced her resignation and that she would be taking up a post with another business operating in the same specialist field.

The woman’s contract contained a restrictive covenant that, amongst other things, forbade her from being directly or indirectly concerned or interested in any competing business for six months after her departure. Although willing to comply with other provisions of the covenant, she argued that that part of it was unenforceable and was unreasonably preventing her from getting on with her career.

In rejecting her arguments, however, the Court noted that she was an experienced businesswoman who had entered into the contract with her eyes open. The covenant was reasonable and valid and there was no good reason for not enforcing it. She would thus have to wait until the expiry of the six-month period before taking up her new position. The company did not object to her performing a restricted training role for her new employer in the interim.

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