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1.0 Introduction: Legal Advice on Enforceability and Employment Challenges

Ade was a physiotherapist in “Joint R Us” in Riverdean Town and continued the practice for 30 years. Now Ade decided to establish Ade’s own business setup. Now Ade recently inherited the properties which was in Longtown for the establishment of his own business setup. Therefore, Ade wants to advertise to attract new clients for which Ade meets with some colleagues regarding the plans. However, Joanna’s sister who was an auditor of the “Sugar Ltd” company faced some key challenges at the workplace late. At the same time, Joanna also faced another challenge from the sickness of the childminders for which Joanna needed to arrange some alternative childcare options in a short notice period. Due to this type of personal disruption, Joanna was distracted from personal performances. Now the following section elaborately describes the fundamental legal concepts and advice for Ade and Joanna for maintaining the enforceability claims.

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2.0 Discussion

1. Advice to Ade for enforceability of the covenants along with the remedies for R Us for enforcement

A “restraint of trade clause” is considered as a restrictive covenant in an employee’s contract that limits the ability after leaving their job, restricting for soliciting any employees or customers or working with competitors. Covenants are put in place to protect an employer’s legitimate business interest ranging from protecting trade secrets to customers. However, an employer must not go beyond what is necessary to protect their business.

Issue

Based on the above case scenario the first issue is whether the covenants in Ade’s employment contract with Joints R Us are enforceable, and if so, what remedies are available?

Rules

There exist a total of 3 types of “restrictive clauses, a non-competition clause” that might stop the employees from working in a competitor's rival business set up. A non-solicitation clause prevents employees from approaching customers when leaving the company. A non-poaching clause stops employees from poaching any current employees[1]. The non-solicitation clause protects the business by which the business can protect from losing the employees or the situation when the employees start the new business. Ade’s non-solicitation clause prohibits soliciting anyone who has ever been a client of Joints R Us for 2 years, covering both current clients and former clients.

Explanation and identification of the key aspects regarding relevant laws

Application of the case law of “Tilman v Egon Zehnder Ltd (2019)” helps to identify the employee's scope for restraint of the trade. The “Chubb Fire Security v Harper (1983” is a case law that can also be described as the application of unenforceable restrictions. The “Rank Xerox v Churchill (1998)” is another case law that describes the employees should act as reasonably. The “TFS Derivatives v Morgan (2005)” is also applicable under this clause that provides the non-poaching clause that only focuses on the current employees.

Applications

The case law of “Tilman v Egon Zehnder Ltd (2019)” is a popular case law where the Lord Wilson’s ‘blue pencil’ test allows for removing unenforceable parts of covenants, like ‘ever been’. Focusing on ‘current clients/clients’ is more reasonable. The 2 years non-solicitation covenant seems excessive with Joints R Us interests[2]. The “Chubb Fire Security v Harper (1983)” and “ Rank Xerox v Churchill (1998)” are other popular case law that states of reduction of 12 months instead of 2 years. This case of “Chubb Fire Security v Harper (1983)”, describes that the two-year clause was too restrictive and therefore not unenforceable. Rank Xerox v Churchill (1998) held employers must act reasonably.

A range of relevant secondary and primary sources to support the provisions of advice

However, “Joints R Us” could argue that they are protecting their legitimate interests such as customers and profits. Physiotherapy creates personal relationships with the customers. Ade would of built a strong relationship over the last 10 years and clients would feel comfortable enough to move to his practice. “Ever been a client” is reasonable as physiotherapy is an ongoing/ reoccurring treatment and past clients are important for their business. Ade’s ability to contact both past and present clients is protecting their customers and ongoing income. Unless Joints R Us can provide evidence that their covenant protects legitimate business, it is highly likely to be unenforceable without narrowing the duration from 2 years to 12 months.

However, it is found that the non-poaching clause of Ade prevents from employment in any current Joints R Us employers (within two years). This protects the employer’s workforce from destabilisation. “TFS Derivatives v Morgan (2005)” non-poaching clause was enforceable as it only focused on current employees[3]. Keeping employees as a legitimate interest is enforceable as seen in the case “Rush Hair Ltd v Gibson Forber (2016)” due to the protection of trade secrets. However, the non-poaching clause in Ade’s contract is likely enforceable and has no breach as Ade poached an employee who left Joints R Us 6 months ago and the clause restricts current employees not past.

It would be possible to also apply Lord Wilson’s blue pencil principle from “Tilman v Egon Zehnder Ltd (2019)” removing the word “any”[4]. As it would fail to meet the reasonableness test. Joints R Us Non-competition clause is too restrictive to be enforceable as 50 miles for 2 years is overly broad to protect their interests when Ade wants to set up a practise 30 miles away.

Joints R Us can still attract clients in Riverdean and surrounding areas without limiting a 50-mile radius. It is unlikely to be enforceable unless Joint R Us can justify why a long duration and 50-mile radius to protect their interests.

Conclusion

Ade’s restrictive covenants restrict him from working in any physiotherapy role within a 50-mile radius of Riverdean for two years. The term ‘any’ physiotherapist work could be a receptionist or supportive position which is too broad and would leave Ade struggling to find work and stop him from earning money in his field[5]. The non-poaching clause is likely to be enforceable. A non-solicitation clause is likely unenforceable unless Joints R Us can provide evidence that it protects their business interests. Joints R Us may claim damages for any proven financial loss from Ade’s future breach.

2. Advice to Joanna regarding claims for unfair dismissal

Issue

Can Joanna claim unfair dismissal against her employer, Sugar Ltd under the “Employment Rights Act 1996”.

Rules

Different types of legislation of “Section 94(1) of the Employment Rights Act (1996) (ERA)”, “S98(1) of the ERA”, and “ S98(4)”, can be applicable in this situation[6]. The case laws of “Marks and Spencer PLC v Williams Ryan (2005)”, and “Taylor v Akidair Ltd (1978)” can be also applicable in this situation.

Application of the relevant fundamental legal concepts along with principles

Under “Section 94(1) of the Employment Rights Act (1996) (ERA)” an employee has the right not to be unfairly dismissed by his employer. The employer must demonstrate a reason for dismissal “Under S98(1) of the ERA”[7]. The employer’s action must also be reasonable, and fair and comply with procedural and substantive fairness, “Under S98(4)”.

Applications

Convey of complex information with clear concise

However, Joanna is eligible for applying the claim under this ERA as she was employed by Sugar Ltd under the section of “(S.230 (1) ERA (1996)”. Under this clause it is stated that the employee must have worked no less than 2 years to bring an employment claim “(S.108, ERA 1996)”. Joanna has mentioned she worked over “some years” and would need to clarify if she meets the 2-year requirement to bring a claim. “Under S95(a)” of the ERA 1996 you need to be dismissed, which Joanna can satisfy as she was dismissed by Bushra and told not to appeal. Joanna would need to file her claim within 3 months of her dismissal under “s.97(1) ERA” as seen in “Marks and Spencer PLC v Williams Ryan (2005)”[8]. Therefore, Joanna satisfies eligibility to bring a claim. However, Joanna needs to be aware that the burden of proof to show she was dismissed is on her “under s95”.

There exist two tests “Under s98(4)” to determine whether unfair dismissal, substantive fairness. Similarly, Joanna does not satisfy any automatically unfair reasons for unfair dismissal “Under s92(a)”. Employers must have a valid reason for dismissal, in Joanna’s case it would be s98(a); capability[9]. In “Taylor v Akidair Ltd (1978)” the courts established that the dismissal must be based on significant capability issues which can be fair if the employers’ concerns are substantiated[10]. Employers like Bushra need to have genuine belief and proof of evidence that Joanna cannot fulfil her job or is not capable of doing her work to the correct standards. The “Iceland Frozen Foods v Jones (1982)” the employment tribunal will decide whether the employers’ decision was within the band of reasonable responses. Investigate the issues thoroughly before dismissing, following the ACAS Code of Practice on Disciplinary procedures. The employer should ensure they provide written formal warnings and inform the employee of their right to appeal. The burden of proof is on the employer.

Even though in “Polkey v AE Dayton Services Ltd (1988)” a different process would result in the same outcome, it’s the lack of procedural fairness which can lead to unfair dismissal[11].

Conclusion

It is found that there are a few remedies available to Joanna if she would like to take based on the Employment Tribunal assessing the reasonableness and procedural fairness. Joanna could pursue “reinstatement (s.114)” and “Re-engagement (s.115)” in a similar role under “S.116” is outlined as a compensation remedy having a basic award or compensatory award which Joanna can claim. Due to the lack of procedural fairness (no appeal, no formal warning, failure to follow ACAS Code[1]), Joanna’s dismissal is likely to be unfair dismissal due to multiple procedural errors.

3.0 Conclusion

The above section elaborately describes that Ade was a physiotherapist who worked in Joiny R Us which was in Riverdean side. In the above situation, elaqborately described the two situation of Ade and Joanna. It is identified that to establish whether a restraint of trade clause is enforceable it must satisfy the reasonable test, of whether the covenants are protecting a legitimate business interest. Similarly for Joana, when dismissing Joanna, Bushra should have considered Joanna’s mitigating circumstances such as train delays, and childcare issues before making the final decision

Reference list

Journals

Ryan, D. (2020) ‘Restating restraint of trade: The implications of the Supreme Court’s judgment in tillman v Egon Zehnder ltd’, Industrial Law Journal, 49(4), pp. 595–608. doi:10.1093/indlaw/dwaa022.

‘Insurance: Third parties (rights against insurers) act 2010 – impact on employee claims’ (2022) Corporate Insolvency: Employment and Pension Rights [Preprint]. doi:10.5040/9781526515650.chapter-012.

Mcmahon, C. and Eustace, A. (2022) ‘Nothing to lose but their restraints of trade: Lessons for employment non-compete clauses from EU Competition law’, Industrial Law Journal, 52(2), pp. 409–450. doi:10.1093/indlaw/dwac025.

Cabrelli, D.L. (2021) ‘Regulating restrictive covenants in English employment law: Time for a rethink?’, SSRN Electronic Journal [Preprint]. doi:10.2139/ssrn.3860238.

Jephcott, M., Kaufman, M. and Gordon, B. (2020) ‘The battle of the tests: A pyrrhic victory? A case note on the Supreme Court judgment in Peninsula Securities Ltd v. Dunnes Stores (Bangor) Ltd’, Competition Law Journal, 19(4), pp. 143–150. doi:10.4337/clj.2020.04.01.

(2024) Relating to landed property [Preprint]. doi:10.12907/978-3-593-45764-2.

A Fell and E Rudz, ‘Employee Non-Compete Restraints: Resolving Uncertainty’ (2023) 46 UNSW Law Journal 1252.

D Cabrelli, ‘Regulating Restrictive Covenants in English Employment Law: Time for a Rethink?’ (2021) 42 Comparative Labor Law & Policy Journal 557.

P Collins, ‘Square Peg versus a Round Hole? The Necessity of a Bill of Rights for Workers’ (2020) 11(2) European Labour Law Journal 199–224.

P Collins and G Golding, ‘An Implied Term of Procedural Fairness during Disciplinary Processes: Into Contracts of Employment and Beyond?’ (2024) 53(2) Industrial Law Journal 125–156.

D Cabrelli, ‘Regulating Restrictive Covenants in English Employment Law: Time for a Rethink?’ (2021) 42 Comparative Labor Law & Policy Journal 557.

[1] Ryan, D. (2020) ‘Restating restraint of trade: The implications of the Supreme Court’s judgment in tillman v Egon Zehnder ltd’, Industrial Law Journal, 49(4), pp. 595–608. doi:10.1093/indlaw/dwaa022.

[2] ‘Insurance: Third parties (rights against insurers) act 2010 – impact on employee claims’ (2022) Corporate Insolvency: Employment and Pension Rights [Preprint]. doi:10.5040/9781526515650.chapter-012.

[3] Mcmahon, C. and Eustace, A. (2022) ‘Nothing to lose but their restraints of trade: Lessons for employment non-compete clauses from EU Competition law’, Industrial Law Journal, 52(2), pp. 409–450. doi:10.1093/indlaw/dwac025.

[4] Cabrelli, D.L. (2021) ‘Regulating restrictive covenants in English employment law: Time for a rethink?’, SSRN Electronic Journal [Preprint]. doi:10.2139/ssrn.3860238.

[5] Jephcott, M., Kaufman, M. and Gordon, B. (2020) ‘The battle of the tests: A pyrrhic victory? A case note on the Supreme Court judgment in Peninsula Securities Ltd v. Dunnes Stores (Bangor) Ltd’, Competition Law Journal, 19(4), pp. 143–150. doi:10.4337/clj.2020.04.01.

[6] (2024) Relating to landed property [Preprint]. doi:10.12907/978-3-593-45764-2.

[7] A Fell and E Rudz, ‘Employee Non-Compete Restraints: Resolving Uncertainty’ (2023) 46 UNSW Law Journal 1252.

[8] P Collins, ‘Square Peg versus a Round Hole? The Necessity of a Bill of Rights for Workers’ (2020) 11(2) European Labour Law Journal 199–224.

[9] D Cabrelli, ‘Regulating Restrictive Covenants in English Employment Law: Time for a Rethink?’ (2021) 42 Comparative Labor Law & Policy Journal 557.

[10] P Collins and G Golding, ‘An Implied Term of Procedural Fairness during Disciplinary Processes: Into Contracts of Employment and Beyond?’ (2024) 53(2) Industrial Law Journal 125–156.

[11] D Cabrelli, ‘Regulating Restrictive Covenants in English Employment Law: Time for a Rethink?’ (2021) 42 Comparative Labor Law & Policy Journal 557.