Post termination restrictions set during probation

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Ltd v Falconer [2020] EWHC 3294 (QB

Post termination restrictions are only enforceable if necessary to protect the employer’s legitimate business interests. The case of Quilter Private Client Advisers Ltd v Falconer [2020] EWHC 3294 (QB) has highlighted that the validity of the covenant has to be assessed when it is entered into and that might lead to it being assessed at a time when the new employee would have little opportunity to develop business contacts and might have only limited rights during their probationary period.

Breach of post termination covenants

Ms Falconer a financial services adviser had handed in her notice within six months of starting. As she was still within her probationary period she was only contractually bound to provide two weeks’ notice. She joined a competitor. The employer alleged that by doing so she was in breach of her post termination covenants which included a non-competition restriction that prevented her being employed or engaged in any undertaking which provided the same services for a period of nine months.

The non-compete covenant was found to be unenforceable

The High Court found the non-compete covenant was unenforceable being wider than was reasonably necessary for the protection of the employer’s legitimate business interests. It considered that it was a relevant factor in assessing reasonableness that her notice period was only two weeks during the probationary period and that generally the length of the notice period in the contract would indicate how important the employee’s services were to the company.

Key takeaway point

The references in this case to the length of the notice period during probation being a factor will be of some concern given that it is standard practice to only provide for relatively short notice during such a period. The fact that the reasonableness of the restriction has to be assessed as at the date it is entered into would appear to impact the enforceability even post probation.  However whether this will result in different restrictions being drafted to apply during and then after probation remains to be seen. 

Do you require any more information regarding post termination restrictions?

If you have any queries regarding post termination restrictions, please get in touch with our expert listed below who will be happy to advise you. 

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