Case Study: Helping an Employer Avoid Injunctions for Post-Termination Breaches of Contract
Summary
How Sarah Henderson, Employment Law solicitor based in our Croydon office, helped an employer retain two new employees and avoid injunctions for post-termination breaches of contract.
The situation
John and Steve worked for Large Displays Ltd, which is one of only four companies in the UK to install large TV screen displays in football stadiums and large music venues.
John and Steve were both promoted to a senior level in the business. John managed relationships with some of Large Displays Ltd’s biggest clients such as Glastonbury and the O2 while Steve was responsible for overseeing high-tech installations.
John and Steve had contracts containing post-termination covenants. Both employees undertook not to misuse confidential information, or solicit or deal with Large Displays Ltd’s clients. John’s contract contained a clause which prevented him from working for a competitor for 12 months while Steve’s prevented him from working for a competitor for 6 months.
John and Steve were headhunted by Big Screens, one of Large Displays Ltd’s main competitors. Big Screens held separate, informal interviews with the two candidates and offered them employment to start three months apart. John and Steve resigned from Large Displays Ltd and joined Big Screens, for substantially higher salaries and bonuses.
Large Displays Ltd found out that John and Steve were employed by their competitor, Big Screens. Their solicitors wrote to John and Steve, threatening to injunct and claimed damages unless John and Steve offered legal undertakings to stop working for Big Screens. Large Displays Ltd’s solicitors also threatened to sue Big Screens for conspiring to induce their breach of contract by inciting a team move.
What Martin Searle Solicitors did
Sarah Henderson advised Big Screens, John and Steve on the potential liability to the firm and these individuals. Sarah explained there was a high level of risk but identified defences that they could raise.
Sarah prepared a robust response to Large Displays Ltd’s letter which set out a number of arguments, including the fact that these covenants were unreasonably wide.
We wrote to Large Displays Ltd’s solicitors, pointing out relevant case law did not apply and aspects of their evidence were not strong enough to enable them to be granted an injunction. We also argued there was minimal financial loss to them.
This delayed matters and due to the requirement that injunctive relief has to be sought immediately breaches are noticed, Large Displays Ltd could no longer show that they had acted without unreasonable delay.
The result
Large Displays Ltd did not respond to our offer of watered down Undertakings, and also failed to pursue their original Undertakings and Injunctive Action. This meant that our client and the two new employees were free to continue to compete with Steve and John’s previous employer.
If you are an employer and need expert legal advice on post-termination restrictions, contact our expert Employment Law Team on 01273 609911, or email info@ms-solicitors.co.uk.
