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Supreme Court holds the non-competition clause enforceable in its first domestic employment restraint of trade case in a century

Tillman v Egon Zehnder Ltd [2019] UKSC 32

Related Member(s):
James Laddie QC
Related Practice Area(s):
Employment Law
Court:

This appeal considered whether the doctrine of restraint of trade is engaged by a restriction on post-employment shareholding, the proper construction of the phrase ‘interested in’ in a non-competition covenant, and the correct approach to severance of a non-competition covenant.

The Supreme Court allowed the appeal, rendering the non-competition covenant enforceable. The Court held that the restraint of trade doctrine is engaged by a prohibition on holding shares. It considered that, in restrictive covenants, the phrase ‘interested in’ generally refers to or includes holding shares.

The Court determined that the appropriate test for severance was not that developed in Attwood v Lamont, which has been overruled. Rather, the new test for severance is whether the objectionable words can be deleted without generating any major change in the overall effect of all the post-employment restraints in the contract.

The Court concluded that the words ‘or interested’ were capable of severance and so the non-competition clause was enforceable.

James Laddie QC was involved in this case.