How will the case of Tillman v Egon Zehnder Ltd affect the way we approach Restrictive Covenants?

In the recent case of Tillman v Egon Zehnder Ltd, the Supreme Court upheld a non-compete restriction setting what could prove to become a very helpful precedent for employers.

Read more Get in touch

How will the case of Tillman v Egon Zehnder Ltd affect the way we approach Restrictive Covenants?

How will the case of Tillman v Egon Zehnder Ltd affect the way we approach Restrictive Covenants?

In the recent case of Tillman v Egon Zehnder Ltd, the Supreme Court upheld a non-compete restriction setting what could prove to become a very helpful precedent for employers.

Ms Tillman is a former investment banker who joined Egon Zehnder as a management consultant.  When Ms Tillman resigned in 2017, Egon Zehnder chose to enforce the non-compete clause in her employment contract. As is often the case, Ms Tillman argued the non-compete clause was unreasonably wide and, as such, was unenforceable.

The main point of contention in the dispute was whether the phrase “interested in” was too wide as realistically it would preclude Ms Tillman from holding a minor shareholding in a competing company. This point took on even greater importance as Ms Tillman had previously been allowed to hold up to a 5% shareholding in a competitor whilst she was employed by Egon Zehnder.

Although the Supreme Court agreed with the Court of Appeal that “interested in” would preclude Ms Tillman from holding shares in a competing company thus making this element of the restriction was unreasonable, it was found that the offending word could be removed in order to rescue the covenant.

Given this’s decision it now seems likely that employers will see this precedent as an opportunity to draft even wider restrictive covenants on the basis any offending words can be removed if necessary to “rescue” the covenant.   However, employers also need to bear in mind that in these circumstances it’s highly likely there will be costs consequences if the Court is required to sever to a particularly wide covenant.

Keebles have extensive experience in successfully resolving disputes involving restrictive covenants for both employers and employees.  If you would like to discuss how best to either tackle or enforce a particular restrictive covenant clause, please call Andrew Broadbent on 0114 252 1416 or email Andrew at andrew.broadbent@keebles.com. 

Share ...
Get in touch