Employment and Commercial Law – Restrictive Covenants

Here, the topic being debated was whether a 12 month restrictive covenant was enforceable against an employee by an employer – such covenants normally have to show/prove that the covenant was “reasonable” in order to protect the employers “legitimate business interests” both in terms of time-period and geography – so, for example, an employer would have great difficulty in trying to enforce a covenant that restricted an employee from approaching ex-clients for “5 years within the island of Ireland”  – the reality here is that once the employee leaves his position the employer will then have an opportunity to contact its own clients and to sweeten them to keep them on board and to not follow the ex-employee if for example he or she decides to go work for a competitor.

In this case, the Court decided that looking at all the facts, such as what was the “norm” in the insurance industry and the time required to “sweeten” those existing clients and the fact that the employee has previously held an employment contract with a similar restriction that the clause would indeed be upheld.

Please note however that 12 to 18 month restrictions are at the far end of the envelope and all cases turn on their own individual facts.