1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202 
Archcraft was a small company which faced a threat to
Page 42
If you've noticed an error in this article please click here to report it so we can fix it.
its business from existing employees who seemed intent on defecting to a competitor. The production director and sales director had left to set up the rival firm.
Archcraft was alarmed by statements from these former directors that they would "attack" Archcraft's customers and staff, that they "owned" those customers and staff, and that the new company intended to harm Archcraft's business.
Worse still, the new company attempted to recruit three more staff from Archcraft. All three had close connections to the new competitor and none had restrictive covenants in their contracts of employment.
Faced with the loss of key employees, confidential information and its customer base, Archcraft asked the three to agree to restrictive covenants preventing competition for 12 months after they left its employment. When they refused Archcraft sacked them.
An Employment Tribunal ruled in favour of Archcraft, but the decision was overturned by the Employment Appeals Tribunal. It recognised the difficulties Archcraft faced and acknowledged that employers may have a legitimate interest in their business which they need to protect.
In some circumstances, employees who refuse to agree to reasonable restrictive covenants in their contracts could be fairly dismissed, it said. But the key question was what impact did the attempt to impose unfair restrictions on employees have?
The Employment Appeals Tribunal said "the question answered itself". As a matter of logic, an employer who tries to impose unfair restrictive covenants on employees cannot fairly dismiss employees who then refuse to agree to them.