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25-09-2014

In Elsevier Ltd v Munro [2014] EWHC 2648 (QB) an Employer sought an injunction against its CFO preventing the CFO from joining  a competitor without giving  12 months prior notice in line with  his contract of employment. The CFO argued that the employer was in breach of contract and that he had been constructively dismissed and was therefore not obliged to work notice.

The Court concluded that the CFO had not been constructively dismissed and simply wanted to try and get out of his notice period so he could take up a better job sooner. Consequently it exercised its discretion to grant an injunction restraining the CFO from working for the competitor for the duration of the notice period.  In reaching its decision the Court considered that there was scope for the CFO to abuse confidential information belonging to his former employer.  It is important to note that there was no suggestion that the CFO had removed confidential documents, rather that he retained within his memory confidential information which would have been of use to his new employer.  The period of time not working, would mean that the confidential information retained within the CFO’s memory would become less relevant and less important as time passed.

It is not unusual for employees who want to get out of their contractual obligations to argue that they have been constructively dismissed, by reason of their employer’s breach of contract.  This is because if the employer has indeed breached the contract of employment, the employee’s obligations under it fall away.  A party to a contract cannot enforce a contract which it has breached itself.   Unusually in the case of notice provisions and garden leave clauses, it is open to the Court to enforce the period for a shorter period of time than actually set out in the contract of employment, where it is reasonable to do so.  In contrast, post termination restrictions are granted on an all or nothing basis.  If it is not reasonable (say) to prevent an employee soliciting clients for 6 months, then the clause fails altogether.  The Court will not decide to grant the restriction for a shorter period of time.

Here are tips on post termination restrictions.

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