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In this case Mr Templeton had been required to sign a contract of employment with restrictive covenants which included a non-solicitation covenant for 12 months after the end of his employment. Its scope was limited to clients with whom he had had dealings in the previous six months.

Restrictive covenants are not enforceable unless they go no further than is reasonably necessary to protect the employer's trade connection with the customers with whom the employee has been dealing. Generally a 12 month restriction will be considered too wide. However, in deciding that the test was satisfied in this case, the judge took into account that the 12 month restricted period correlated with the normal renewal period for most types of insurance and so was enforceable.

Comment:

This is an example of how a good contract of employment can protect the employer in the most serious of situations. In addition to the restrictions many employers will also ensure that there is a payment in lieu of notice clause in the contract of employment, which enables them to end employment immediately without being in breach of contract by failing to give the full notice period. It is also recommended that contracts include garden leave clauses, which allow an employer the option to keep the contract alive for a defined period without the need to dismiss, while preventing the employee from having contact with customers or attending the office.

A restrictive covenant will not be enforceable if the employer is in fundamental breach of the employee's contract at the time it is seeking to enforce it. For example, if you make a payment in lieu of notice without having this provision in the contract you will NOT be able to rely on post termination restrictions. In addition, employees will often try to claim that their employer's conduct leading up to them leaving the company is in fundamental breach of contract - in other words they have been constructively dismissed. In the above case the employee tried to build such a case (unsuccessfully).