Susannah Kintish, Adam Turner, Matthew Wood and Suresh Patel have recently updated the chapter they author on 'Restraint on Competition' in the leading practitioner's text, Harvey on Industrial Relations.
One of the key cases in this area from the past year is Planon v Gilligan [2022] EWCA Civ 642 which provides guidance on how quickly an employer must act in order to obtain interim injunctive relief to restrain an employee from moving to a competitor in breach of their restrictive covenants. It is well established that employers must make an application for interim injunctive relief promptly, but what does that mean in practice?
In Planon, the former employee started work in breach of their non-compete on 1 September 2021; the former employer discovered this on 2 September 2021 and sent a letter before action on 20 September 2021. The matter was not resolved and the former employer issued its application for interim relief on 31 October 2021. The hearing of the application took place on 5 November 2021 and an interim injunction was granted to the former employer.
The case was appealed. Although not an issue which fell to be determined by the Court of Appeal, there were contrasting views expressed amongst the Court of Appeal judges on whether the two-month delay by the former employer between finding out about the employee's breach and making an application for interim relief was fatal to its application. On the one hand, the employer had acted reasonably by seeking to resolve the matter in correspondence and should not be penalised for having done so. On the other, any damage to trade secrets or confidential information would have been caused "in the first few days, and certainly well before the lapse of two months" – so there was nothing left for the former employer to protect through an injunction. Where other factors are evenly balanced, the Court should preserve the status quo; in this case, that would have been to allow the employee to continue in employment with the competitor.
Planon reinforces that while there is no hard and fast rule on how much of a delay might be fatal to an application for an injunction, prompt action is necessary. It is clearly important for employers to act – and be seen to have acted - quickly on discovering that a former employee is acting in breach of any of their post-termination restrictions. There will nearly always be a requirement to have entered into some form of pre-action correspondence, but employers who want to put themselves in the best position to obtain valuable injunctive protection for their businesses need to be prepared to pursue litigation immediately if a swift resolution through correspondence is not achieved.
It is important for employers to seek urgent and specialist legal advice on discovering that an employee is acting in breach of restrictive covenants so that they do not miss out on the opportunity to obtain valuable protection from the Court. Our specialist High Court employment litigators are always available to act immediately. Please contact the team on mdremploymenthighcourt@mishcon.com.