Broad wording voids

Good morning and welcome back to your weekly dose of case law. Last week we had two cases for you, one about employment status and another on tribunal fees. This week, we have three cases for you. Yes three! (groan/cheer – delete as appropriate)

Our first case is a Court of Appeal case that concerns restrictive covenants, our second is an Early Conciliation case and we wrap things up with a case about the National Minimum Wage.

Tillman v Egon Zehnder Limited

This case is actually the appeal of a case we covered earlier in the year. To briefly summarise, Egon Zehnder, the employer, wanted to enforce a covenant against a former employee, Tillman. Tillman had been employed by EZ for 13 years and the covenants in her contract were from her original contract when she joined the company.

When she joined the employer, she had been touted as a rising star and given increased terms and access to customers that other employees of similar seniority did not receive. Since then she had been promoted numerous times to partner. She then left the employer and they tried to enforce the covenant.

Tillman argued that her initial covenants were unreasonable given that they were from her original contract at a much more junior level. However, the High Court held that because she was deemed a rising star, she had been afforded benefits, information and access to customers that an ordinary employee of that level would not have had. The employer could enforce the covenant.

Tillman appealed, citing that the wording of the covenant was unreasonable. The Court of Appeal allowed the appeal and set aside the injunction, allowing Tillman to join her new employer. The CoA held that because the non-compete covenant included the phrase, ‘interested in”, it meant that the covenant was too wide and therefore unreasonable as it precluded her from becoming a shareholder in a competing organisation.

The takeaway point:

Covenants that are drafted in a wide, one-size fits all way are quite possibly too broad to be enforceable. The CoA has held that if words to the effect of ‘interested in’ are too broad and cannot be viewed as separate from the rest of covenant. We advise anyone who has concerns about covenants to contact us. As a minimum you should check whether your non-compete have the offending words “Interested in” in.