Is your client base protected?

A recent High Court decision, Capita plc & Anr v Darch & Ors, has provided helpful guidance on the ownership of emails and the enforceability of restrictive covenants. Employment Lawyer, Paula Stuart, considers the impact of the judgment and how employers can take steps to protect the business.

In this case, Capita made an application for an interim injunction against former employees who had set up or joined a competitive business. As part of the application, Capita sought disclosure of all emails sent from company accounts to the former employee’s personal accounts and to enforce the restrictive covenants in the former employee contracts.

Ownership of emails

Following the decision in Fairstar Heavy Transport NV v Adkins the High Court did not accept Capita’s submission that the emails in question or their contents were the property of Capita and refused the application. It determined that in Fairstar the court had expressly excluded personal and private emails.

Restrictive Covenants

The court also dismissed the application for an injunction to enforce the restrictive covenants in the contract on the grounds that ‘the breadth of the contractual restrictions that Capita have sought to impose upon employees is ..…. likely to be held at trial to be too wide’.

Guidance

In dismissing the application the High Court provided useful guidance on drafting of post-termination restrictions. It suggested that:

1. the definition of a customer in a non-solicitation restriction should be limited to those with whom the employee had ‘personal and material dealings’ and also should not seek to cover those ‘about whom the employee becomes aware or is informed in the course of his (or her) employment’ because that category is likely to be too wide to be enforceable
2. the definition of a restricted person in a non-poaching restriction should be limited to those with whom the employee had ‘personal and material dealings’.

What should employers do?

In light of this decision employers should review their current policies and contracts. The older the contract the more likely it is to contain historic restrictive covenants which are too wide and unenforceable. In order to protect the business restrictive covenants should be based around non-soliciting and non-dealing and be drafted in line with the guidance provided in this case to improve the prospect of them being enforceable.

Contracts and policies should also be drafted on the basis that all company information is company property regardless of where it is stored. Whilst the decision in Fairstar precluded personal emails an express clause will go some way to assist the company in identifying and protecting it’s company information.

If your contracts and policies have not been updated for some time then act now and contact Paula Stuart on 01908 689345 or email pstuart@geoffreyleaver.com who can review and update your contracts to protect the company and it’s client base.

Paula Stuart | Partner