In Hine LLP v. Jones [2023] EWHC 1708, Constable J dismissed an application to enforce a solicitor’s minimum employment term. He held Mrs Jones was free to continue her employment at her new firm, which fell outside the definition of Competing Business for the purposes of her restrictive covenants, and declined to enforce specific performance of her employment contract.
Background
Hine LLP applied for an injunction to against an associate solicitor in its family department whom it employed on a minimum term of three years. The injunction sought to enforce her duty of fidelity by restraining enticement of its clients for the remaining 22 months of her minimum term. Hine’s application stopped short of seeking to prevent her working elsewhere. As Hine contested her resignation and held her to her employment, it did not rely on the post-termination covenants (which in any event would not have precluded her new employment).
Judgment
Constable J agreed that this was an application for specific performance of an aspect of the employment contract [36]. He observed that this was a hybrid application, as the employer was not seeking to prevent employment elsewhere nor relying on the post-termination covenants. It thus differed from Sunrise Brokers LLP v. Rodgers [2014] EWHCA Civ 1373 as that case concerned the enforcement of the full duties of the notice period including not to work at a competitor.
Hine conceded the Respondent’s submission that it was incumbent on the court to consider the restraint of trade doctrine [35]. It was therefore relevant to the exercise of the court’s discretion to ask whether the restraint sought was reasonably necessary to protect Hine’s legitimate business.
However, as a hybrid case, the judge considered that the employee could not rely on the burden being on the employer to prove the scope of legitimate business interests and the reasonableness of the restraint [39]. The justification of the restriction fell to be addressed at the balance of convenience stage.
The starting point was that an employer could be taken, in imposing post-termination covenants within the contract of employment, to have balanced their legitimate business interests against the public policy doctrine of restraint of trade [46]. Here, the covenants ran for 6 months post-termination. The judge asked what was different about this dispute that meant that those covenants were no longer inappropriate. He found that Hine had failed to identify any feature of the dispute over Mrs Jones’ termination that meant the balance struck in the post-termination covenants was no longer appropriate to protect its interests.
Comment
The judgment is an interesting and unusual extension from the notice period injunctions seen in Sunrise Brokers and Red Bull v. Fallows [2021] EWHC 9602. Of particular interest to practitioners is the judge’s approach to the restraint of trade doctrine.
The judge did not determine the Respondent’s argument that the minimum term was void under s. 203 Employment Rights Act 1996 as it limited the provision for the employee’s giving of notice under s. 86. The judgment therefore leaves at large arguments as to the proper interpretation and effect of s. 203, whether it is to be interpreted purposively and by reference to employee rights rather than obligations – even where in fact, as argued in this case, the employee’s obligation could be also be a valuable right.
Lucy was instructed by Blandy & Blandy LLP.
A copy of the judgment can be found here.
This case was also covered in an article from The Law Society Gazette. The article can be found here.
