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New decision in Team Moves Litigation - Employment Lawyer Samantha Mangwana discusses further

By Principal Lawyer, Employment & Partnership

Sam Mangwana was previously quoted in The Lawyer commenting on a decision in a recent 'Team Moves' case*. The case went in favour of the employees, and is useful for resisting injunction applications in restrictive covenants cases.Over recent years, there has been huge growth in ‘Team Moves’ litigation. We see ever more elaborately drafted contractual restrictions against poaching staff, competing for business, soliciting or dealing with customers after Employment.  

When a team does go, increasingly, spurned employers react by applying for an injunction, asking the court to stop them in their tracks. As the litigation increases, Restrictive Covenants and arguments about fiduciary duties get more complex. Both parties are often gambling in confusion. The costs risks are enormous, and uncertain.  

This decision thankfully puts common sense first. For employers with an itchy litigation trigger-finger, it is also a 44-page caution to stop and think first, or risk feeling very foolish, and out-of-pocket. The High Court should not be asked to uphold more extensive restriction covenants in junior employees’ Contracts than for Senior Executives. Post-termination restrictions will be void if they go further than reasonably necessary to protect legitimate business interests, and short notice periods also make a mockery of arguing that long restrictions do.

Learning from the case, employers should not reach for a boilerplate precedent, but assess this carefully, and update restrictions to reflect increasing seniority.  If someone is genuinely valued, and their departure poses a significant business risk, their notice period should also be re-negotiated, with appropriate consideration. Don’t expect the High Court to be impressed by injunction applications otherwise.  

Perhaps the moral of the tale is this: before leaping for the springboard, suss out your strategy, and how much it might hurt if you fall flat on your face.* CEF Holdings Ltd & Anor –v- Mundey & Ors [2012] EWHC 1524 (QB)

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