Employer granted injunction to enforce non-compete clause ahead of challenge by former employee

The High Court agreed that there was a serious issue to be tried in relation to the clauses. However, it accepted Ropner Insurance's argument that it was more likely to suffer if the injunction was refused than its former employee, Philip Wood, would suffer by its being granted.

Wood had worked for Ropner as an insurance broker, but resigned in March 2016. After handing in his notice he set up his own company, Clearwood International, and applied for an FCA licence. He had asked to resign with immediate effect and to be released from contractual non-compete and confidentiality clauses in exchange for a cash payment corresponding to Ropner's potential loss, but his proposal was refused, according to a Lawtel summary.

Ropner later discovered that Wood had forwarded confidential documents to his personal email account immediately before, and after, he resigned. Wood's contractual notice period expired on 1 September 2016 and Ropner noticed that, earlier that month, some of its clients had decided not to renew their policies. One client informed Ropner that it had transferred its business to Clearwood.

Wood has argued that the restrictive covenant contained in his employment contract was too wide to be enforceable, and his case continues. He also argued that Ropner's application for an injunction was unnecessary as it had not been able to provide evidence of a breach, and that damages were an adequate remedy in any event.

Employers are generally not entitled to protect themselves against competition from ex-employees on public policy grounds. For a restrictive covenant to be enforceable, an employer must therefore be able to convince the court that the clause is designed to protect its legitimate business interests and extends no further than is reasonably necessary for those purposes. It is up to the employer to prove these points in the event that the clause is challenged by the ex-employee.

Ropner has argued that the clause in this case is sufficiently narrow as it is limited only to those clients with which Wood had dealings and covered only the type of work with which Wood was involved, according to the Lawtel summary. The clause is also limited to 12 months. It does not believe that damages would be an adequate remedy, as it would be "very difficult to quantify the loss of business", according to the summary. Wood had been shown to have limited financial means with the result that he may be unable to pay any damages awarded.

"The judgment makes clear that English courts will not take lightly any theft of confidential data," said Alan Sheeley of Pinsent Masons, the law firm behind Out-Law.com, an expert in civil fraud and asset recovery.

"The decision should provide comfort for employers seeking to protect a legitimate business interest through enforceable restrictive covenants in employment contracts. Where the court decides that it is more probable that an employer will suffer if the data is not returned or restrained, employers should be reassured following this ruling that the court will use all the tools in its armoury to support victims," he said.

"Time is of the essence when confidential information has been stolen. Any delay in acting could lead to the information being used to the detriment of the employer. The ruling shows that it is of paramount importance that any use of the confidential information is prevented as quickly as possible," he said.