Unusual And Onerous Non-Compete Restriction Is Potentially Enforceable ' But The Employer's Delay Ruled Out An Interim Injunction

• Published date: 27 June 2023
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Contract of Employment, Employee Rights/ Labour Relations, Arbitration & Dispute Resolution
• Law Firm: Brahams Dutt Badrick French LLP
• Author: Ms Amanda Steadman

The High Court has held that an unusual non-compete covenant lasting for a period of up to 12 months at the employer's discretion may, in principle, be enforceable, even where the employee had already spent 12 months on garden leave. However, the Judge declined to award an interim injunction due to the employer's excessive and unreasonable delay.

What happened in this case?

Mr Couture began working for Jump Trading International Ltd (Jump), a leading trading and investment firm, in June 2016. He worked as a quantitative researcher in Jump's London-based trading team. His employment contract contained a non-compete restriction preventing him from engaging in "competitive activity" during the "non-compete period". Unusually, the contract gave Jump discretion to set a non-compete period of up to 12 months within 20 days of notice of termination being given. Further, the contract bucked the trend of setting off time spent on garden leave against the non-compete period. Instead, the non-compete period would start after the end of the garden leave period.

On 23 March 2022, Mr Couture accepted a job offer from Verition Advisers UK Partners LLP (Verition). On 30 March 2022, Mr Couture resigned on notice, however, he did not tell Jump that he was intending to work for Verition. Jump told Mr Couture that he would be placed on garden leave for the duration of his 12-month notice period.

On 31 March 2022, Verition received advice from its lawyers than the non-compete restriction in Mr Couture's contract was not enforceable. On the same day, Jump told Mr Couture that after his garden leave had ended he would be subject to a 12-month non-compete period, expiring on 30 March 2024. Mr Couture said this was not acceptable.

On 12 July 20222, Mr Couture told Jump that he intended to work for Verition after his garden leave had ended. Jump's position was that this would be competitive activity and breach the non-compete restriction. Attempts were made at resolving the dispute, but, ultimately, these fell flat.

On 17 November 2022, Mr Couture wrote to Jump stating that he would join Verition in April 2023, but that for the first 12 months he would be writing software rather than trading, which he did not believe amounted to competitive activity. Mr Couture also said that, in any event, he did not believe the non-compete restriction was enforceable. Jump eventually replied on 6 March 2023, reiterating its position that Mr Couture would be in breach of the restriction if he...