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Reasonableness of non-compete clause

June 9, 2017

 

 The High Court has held that the reasonableness of a non-compete clause is assessed at the time contract entered into in light of the parties' expectations of future promotion.

 

Upholding a six-month non-compete restrictive covenant, the court found that it went no further than reasonably necessary to protect the legitimate business interests of the employer. Although the employee was very senior at the time of the termination of her employment, she had not signed new restrictive covenants since she was first hired in a more junior role. Nevertheless, she had been recruited with high hopes for her future potential and it was in the parties' contemplation that she would be swiftly promoted. The correct approach was to determine the reasonableness of the non-compete clause at the date of the contract by reference to the employee's status at that time and what was contemplated by the parties as a result of that.

 

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