Recruitment: Enforcing Restrictive Covenants

9th August 2018 | Recruitment, Dispute Resolution

It is all too common to see employees of recruitment companies break the law by contacting candidates or clients after leaving and joining a rival agency. Fortunately, the law is there to protect these companies against the actions of rogue... Read more

It is all too common to see employees of recruitment companies break the law by contacting candidates or clients after leaving and joining a rival agency. Fortunately, the law is there to protect these companies against the actions of rogue former employees by way of restrictive covenants, and in June Sherrards helped one of its long standing  recruiter clients obtain an injunction in such a case.

Our client was awarded an interim injunction against a former employee to prevent her breaching post-termination restrictive covenants and misusing confidential information, after evidence showed that the breaches had caused significant commercial damage to the company and its customer relationships.

Our client had employed the defendant as a recruitment consultant between September 2016 and June 2018. Her contract obliged her not to solicit or deal with the company’s restricted customers and candidates for six months after termination. The contract also contained post-termination provisions regarding confidential information to which she had access during her employment. The defendant resigned from the company and, shortly after, joined a competing agency, specialising in recruitment in the industrial sector (a sector our client also specialises in).

Our client then discovered that the ex employee had dealt with several of its restricted customers and candidates. It produced evidence showing that she had informed some of its candidates – who were due to start a shift for a major client – that they were no longer required to attend as the shift had been cancelled. It also showed that she had sent her new employer’s registration packs to those candidates.

Our client said the ex-employee’s conduct put this confidential information, in the form of trade secrets and business connections, at significant risk and it was therefore compelled to protect its position by seeking an injunction.

In considering whether to grant relief, the court had to apply the law as in the seminal case of American Cyanamid Co versus Ethicon. There had to be a serious issue to be tried, damages must not be an adequate remedy and the grant of the injunction had to be the most convenient option on balance.

An interim injunction would give our client a substantial part of the remedy it sought. The ex-employee was aware of the instant hearing but had chosen not to appear or to send representation.

It was emphasised before the court that damages alone would not be an adequate remedy and that, in the absence of an injunction, our client would undoubtedly suffer (and continue to suffer) serious irreparable harm. The Judge – Karen Steyn QC – agreed and granted the injunction without hesitation.

To find out more, please contact Aaron Heslop (full contact details below).

This article was originally authored by Barney Laurence, a former team member at Sherrards.