The High Court reinforced the stringent legal principles governing the enforceability of post-termination restrictive covenants.
Facts:
Mr. Potter is a young man who had been working for the claimant as a salesperson since 2017. The claimant is a company registered in England as a subsidiary of a USA company, selling made-to-measure suits and shirts manufactured in the USA.
His initial contract included restrictive covenants limited to 6 months and contained several reliefs, including limitations on geographic area, role and capacity. In 2022, the contract was changed, primarily to address base salary issues. The new contract doubled the duration of the non-compete covenant to 12 months and removed the previous reliefs, significantly widening its scope. Mr. Potter asserted he was not informed of these changes, and the claimant failed to produce any evidence to justify the widening of the scope or the doubling of the duration.
Mr. Potter’s performance was strong, earning him a spot in the President’s Club. However, following a conduct issue in January 2025, he was subjected to an addendum requiring humiliating and intrusive conditions, including weekly “counselling” from “Father Bob,” a ban from earned trips, and exclusion from leadership roles. He had also raised product quality concerns that he felt were dismissed. Finding the work culture toxic and the disciplinary action to be unfair and intrusive, Mr. Potter resigned in frustration in 2025.
Following his resignation, the claimant’s response was deemed “insensitive, verging on brutal”. Within two days, the HR manager, Ms. Colby, had cut off all IT access, threatened an investigation, and banned the defendant from the office. The following day (on a Sunday), the claimant’s lawyers hand-delivered a threatening letter to the defendant’s home.
The claimant sought to enforce a 12-month restrictive covenant against competition (RCC) contained in a 2022 contract and claimed the defendant breached his contractual duties, such as running down his sales in the months prior to his resignation and soliciting staff.
Decision:
The High Court dismissed the claim for breach of contract and ruled that the 12-month RCC was unenforceable, as it went further than what was reasonably necessary to protect the claimant’s business.
The Judge found that Mr. Potter’s conversations with staff were for advice and reassurance, not solicitation, directly contradicting the claimant’s hearsay allegations. His decline in sales was found not to have been intentional but rather due to suspension, holidays, and documented stress and demotivation caused by the claimant’s intrusive management and humiliating disciplinary measures, including the “Father Bob” counselling sessions.
The claimant failed to provide any rational justification for doubling the RCC duration from 6 months (in 2017) to 12 months (in 2022), especially since Mr. Potter’s role had not changed. The Judge dismissed the claimant’s buying cycle analysis, noting that the company’s quick post-resignation sales success proved a 12-month period was unnecessary to rebuild relationships. The covenant was excessively broad and constituted a “one size fits all,” lacking any balance for the employee.
Implications:
This case reinforces the longstanding principle that courts will not uphold a covenant if it extends beyond what is strictly necessary to protect the employer’s legitimate business interests, which are typically confined to confidential information and customer goodwill. The decision confirms that employers cannot rely on general assertions or “one size fits all” clauses.
The case serves as a warning about the risks employers run when their conduct is perceived as heavy-handed, humiliating, or toxic, particularly during disciplinary or exit procedures. The Judge heavily criticised the claimant’s management for imposing an intrusive, quasi-religious disciplinary addendum and for the “insensitive, verging on brutal” treatment following the resignation.
