In Croesus Financial Services v Bradshaw Restrictive, the High Court held that covenants prohibiting an ex-employee from soliciting or dealing with his former employer’s customers for a year post-termination were not an unreasonable restraint of trade.
On the facts, the Court was satisfied that the 12-month non-solicitation and non-dealing covenants did not extend any further than was reasonably necessary in order to protect the employer’s business.
The Defendants argued that the restrictions were excessive and therefore unenforceable because they applied to all clients with whom Mr Bradshaw had any “personal contact in the course of [his] duties” in the two years before his employment ended. The Court rejected that submission and made the point that the wording only applied to clients whom Mr Bradshaw had personally engaged in more than trivial business contact.
Regarding the length of the covenants, the Court commented that 12-month provisions appeared to be standard within that sector. Furthermore, the evidence relating to the strength of relationships between independent financial advisers and their clients supported the Company’s argument that the duration of the restriction was reasonable. The Court also acknowledged that a substantial period of time was required to establish relationships between the ex-employee’s clients and their new advisers, and that this process could not be rushed.
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