Enforceability of Non-Solicitation Clauses: – Safetynet Security Ltd v Coppage and another [2012] EWHC B11

It is common practice for employers to include restrictive covenants in employment contracts. However, restrictive covenants can amount to an unlawful restraint of trade and will therefore be unenforceable.  These clauses will only be enforceable if it can be shown that they are necessary to protect the “legitimate business interests” of the party seeking to enforce them.  This case highlights the difficulties in drafting restrictive covenants and how fine the line can be between a covenant that is enforceable and on that is not.

In this case the Court had to consider whether a non-solicitation clause that prevented an employee from soliciting any individual or organisation who had been a customer of the company during his employment for a period of 6 months, was enforceable.

Mr Coppage was employed as the Business Development Director of Safetynet, which was a small business providing security services.  He resigned and almost immediately after set up a new company.  It transpired that approximately 5% of Safetynet’s clients transferred their work to this new company.  Safetynet brought a claim against Mr Coppage for breach of his non-solicitation obligations and Mr Coppage defended the claim on the basis that, amongst other things, the non-solicitation clause was unreasonable and therefore unenforceable.

In determining whether a non-solicitation clause is reasonable, the Court set out the following guiding principles:

1. The Court should consider the construction of the clause for its pure meaning.
2. The Court should consider the object of the restraint, for instance the protection of the employer’s client base and goodwill.
3. Finally, the Court must construe the clause in context and have regard to the factual matrix at the date on which the contract was made.

In this case, due to some key facts such as Mr Coppage’s seniority within Safetynet, the Court enforced the covenant against Mr Coppage, a decision which, in many ways, fly’s in the face of the default position that non-solicitation clauses without limitations will be unenforceable.  This is a decision that is likely to be welcomed by businesses as it offers some comfort that the law will, in certain circumstances, enforce non-solicitation covenants against former employees.

However, whilst this decision was positive for Safetynet, it is important to remember that each case of this nature turns on its own facts and so there is no “one-size-fits-all” rule for employers to follow when drafting employee’s covenants.  Whilst it is likely to be unreasonable to impose restrictions on soliciting all clients on junior employees it may, in some cases, be reasonable to do so if that employee is particularly senior or, as can often be the case with sales/marketing staff, they are seen as the “face of the business”.  In those circumstances, such restrictions may be reasonable to protect the “legitimate business interests” of the business.

Employers should regularly review restrictive covenants to see if they need to be updated so that they properly reflect an employee’s role in the business.