Recently, the Court of Appeal reviewed the scope for restrictions which can be placed on employees via their employment contract after they have left their jobs.
In Beckett Investment Management Group v Hall, the employees were two senior independent financial advisors for subsidiary companies of BIMG. Despite a clause in their contract stating that they were not to deal with clients of BIMG within twelve months of the termination of their contract, the two employees left and set up their own business and continued to deal with clients of BIMG. BIMG claimed that this was in breach of the non-dealing clause in their employment contracts. At the High Court of Justice Queen's Bench Division, it was decided that the non-dealing clause was unreasonable and must be limited to advice provided by BIMG itself. The clause therefore did not apply to subsidiaries.
Reversing this decision, the Court of Appeal said that the 12 month non-dealing restriction was reasonable. It was stated that 'business of the company' included that of subsidiaries, and BIMG clearly had an interest in the client base of its subsidiaries. This coupled with the senior positions held by the employees involved meant that the non-dealing clause was reasonable.
This case is important for employers as it is likely to become a point of reference in the area of non-dealing clauses, especially as the term 'client' was construed as including clients of subsidiary companies.