In our April bulletin we reported on the case of Prophet plc v Huggett  in which the High Court considered post termination restrictions in Mr Huggett’s contract of employment. Our article can be found here.
The restrictions were drafted in such a way that they were meaningless, as they said that they prevented Mr Huggett selling software products developed by Prophet plc. Prophet plc were the only ones selling their products, so this meant that on the words used in the clause, the restrictions could never apply. The High Court held that by adding 3 words (“or similar thereto”) the covenants would make sense, and with the addition of those words the restrictions were enforceable. This decision has now been overturned by the Court of Appeal.
It has always been the case that the courts will not add words to a restrictive covenant to make it enforceable. The courts have allowed themselves to delete words (the so called blue pencil rule) so as to make restrictive covenants enforceable, but the High Court in this case went much further than this and had really broken into new ground. The Court of Appeal’s decision has restored the former position – so, if you want to be able to rely on restrictive covenants, make sure they are drafted with great care and ideally seek advice at the drafting stage, not just at the time when you are seeking to enforce them.
Do you need help with drafting restrictive covenants? We can help! Please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).