The enforcement of restrictive covenants

In the recent case of Tom James UK Ltd v Potter [2025], the court made interesting comments on the enforceability of restrictive covenants.

The claimant, a bespoke suit manufacturer, sought to enforce post-termination restrictive covenants in the employment contract, with the implied obligations of fidelity and good faith, in relation to a former salesperson. The case highlights the very nuanced nature of restrictive covenants and the potential difficulties in enforcing them.

The claims relating to breaches of the implied obligations of fidelity and good faith were dismissed, as the claimant failed to present sufficient factual evidence to support its position that the defendant had engaged in inappropriate conversations with customers and colleagues about his departure from the business.

Of particular interest to those drafting employment contracts is the court’s position on the enforcement of the defendant’s post-termination restrictions. He was subject to a 12-month non-compete restriction clause, but there was evidence that the duration had been increased from six months.

The court dismissed the non-compete provision as being unenforceable for two reasons:

1. The claimant was unable to clearly set out the legitimate business interest the clause was intended to protect.
2. The claimant was also unable to justify the dramatic increase in duration of the non-compete clause. The defendant had not been promoted, received a substantial pay increase or placed in a greater position of responsibility, and there was no other clear reason for the extension. The court found that the claimant had not considered the defendant’s interests when increasing the period of the non-compete provision.

As a result, the non-compete clause was struck out as unenforceable, the claim was dismissed and the interim injunction that had been obtained was discharged.

The case illustrates the fine balancing act the court undertakes when assessing the enforceability of restrictive covenants, and the great care that needs to be taken when drafting such provisions.

It reaffirms the principle that a restrictive covenant in an employment contract must not go further than necessary to protect a legitimate business interest. It also shows that any increase in scope must be justifiable; linking a more onerous covenant to a promotion or similar change in status is likely to be more defensible.