Enforcing restraints of trade: lessons from recent urgent applications

A covenant in restraint of trade is enforceable unless the party resisting enforcement shows that it is unreasonable. That allocation of the onus favours employers — but only where the restraint has been drafted with care and enforced without delay. Our directors have acted for corporate and publicly listed clients in urgent High Court applications concerning restraints of trade and unlawful competition.

What the courts weigh

• Whether the employer has a protectable interest — trade connections or confidential information — and not merely a desire to suppress competition;
• Whether the geographic area and duration are no wider than the interest requires;
• The former employee’s access, in fact, to the interest sought to be protected; and
• The relative prejudice to each party if the restraint is or is not enforced.

Act quickly

Urgency is self-created where an employer sits on knowledge of a breach. The application should be launched within days, supported by direct evidence of the employee’s access to confidential information and customer connections. Interim relief, once obtained, frequently resolves the dispute.

We advise on the drafting of high-level employment agreements, including covenants in restraint of trade, and represent both employers and executives in enforcement proceedings.