June 30, 2008

Assessing the Reasonableness of Restrictive Covenants

The enforceability and reasonableness of non-solicitation and non-dealing restrictions in relation to customers was considered in the case of WRN Limited (WRN) v Ayris [2008] EWHC 1080. This case serves as a useful reminder that the reasonableness of restrictive covenants will be assessed at the date when they were entered into and by reference to an employee's job title when employment commenced. Any subsequent promotions during an employee's term of employment will not be relevant. In addition, the High Court also considered whether WRN could claim that customer business cards and addresses constituted confidential information despite their details being available on WRN's website.

Mr Ayris was employed by WRN as Marketing and Rebroadcasting Manager in September 1999. In October 2007, he was promoted to Head of Sales and Marketing until his employment terminated in February 2008. Mr Ayris left WRN to take up employment with a UK based competitor. After his employment terminated, Mr Ayris was subject to non-solicitation and non-dealing covenants which applied for six months. Mr Ayris also took with him about 80 business cards and copied addresses from his work e-mail contact list to his home e-mail address book.

It was held that WRN did not succeed in its claim in relation to the confidentiality of the business cards and addresses which were taken by Mr Ayris. As these customer details were available on WRN's website and were easily accessible through basic internet searches, such information did not constitute confidential business information.

While the High Court found that the restrictive covenants in this case were too wide to be enforceable, it reconfirmed that the reasonableness of restrictive covenants should be assessed on the date when the employment contract was signed. Any promotion(s) which may have taken place during the term of employment will not be taken into account. Employers should therefore review the continued suitability of their employees' restrictive covenants in cases where employees are promoted as new covenants may be required to reflect the greater responsibilities of their new position.

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