Tillman v Egon Zehnder Ltd [2019]
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Tillman v Egon Zehnder Ltd [2019] UKSC 32 is a notable case, where the Supreme Court addressed when a problematic section of a non-compete clause could be severed from a contract to make it enforceable. This case involved Egon Zehnder (EZ), a global search and recruitment firm, which had employed Ms Tillman under a contract containing a non-compete clause. This clause restricted Tillman from being 'directly or indirectly engaged or concerned or interested in' any business competing with EZ UK or the broader EZ Group for six months after her employment ended.
After leaving her position in 2017, Tillman intended to join a competitor, leading to a legal dispute over the enforceability of her non-compete clause. She argued that the clause was an unreasonable restraint on trade, and therefore void. In response, Egon Zehnder sought an injunction to enforce the clause. The High Court granted this injunction, concluding that the language 'interested in' did not constitute an unreasonable restraint. However, the Court of Appeal overturned this decision, finding the clause overly restrictive, and the case was then brought to the Supreme Court.
The Supreme Court focused on three key issues: the nature of the restraint of trade, the interpretation of the phrase 'interested in', and the principle of severance. First, the Court confirmed that the non-compete clause constituted a restraint of trade but was legally permissible in this context. On the second issue, the Court held that 'interested in' included any shareholding in a competitor, making the clause overly restrictive. As written, this phrase barred Tillman from even a minor investment in a competitor, thus constituting an unreasonable restraint of trade.
The Court then turned to the doctrine of severance, assessing whether the phrase 'interested in' could be removed without affecting the rest of the clause or altering the contract’s nature. The Court established that severance was appropriate here since the removal of the phrase left the remainder of the clause intact and enforceable, without any need to rewrite other parts of the contract. Consequently, the Supreme Court reinstated the High Court's injunction, limiting Tillman’s employment opportunities with competitors as per the modified non-compete clause.
This case was landmark for its clarification of severance principles in restraint of trade cases. It highlighted the need for clear and carefully drafted restrictive covenants in employment contracts, as the courts may only sever unreasonable portions that can be removed cleanly, without fundamentally altering the contract's character. This ruling emphasised the judicial preference to preserve enforceable portions of a contract wherever possible, ensuring that contractual restrictions on employees' future employment can remain valid even if parts of those restrictions are deemed unreasonable.
After leaving her position in 2017, Tillman intended to join a competitor, leading to a legal dispute over the enforceability of her non-compete clause. She argued that the clause was an unreasonable restraint on trade, and therefore void. In response, Egon Zehnder sought an injunction to enforce the clause. The High Court granted this injunction, concluding that the language 'interested in' did not constitute an unreasonable restraint. However, the Court of Appeal overturned this decision, finding the clause overly restrictive, and the case was then brought to the Supreme Court.
The Supreme Court focused on three key issues: the nature of the restraint of trade, the interpretation of the phrase 'interested in', and the principle of severance. First, the Court confirmed that the non-compete clause constituted a restraint of trade but was legally permissible in this context. On the second issue, the Court held that 'interested in' included any shareholding in a competitor, making the clause overly restrictive. As written, this phrase barred Tillman from even a minor investment in a competitor, thus constituting an unreasonable restraint of trade.
The Court then turned to the doctrine of severance, assessing whether the phrase 'interested in' could be removed without affecting the rest of the clause or altering the contract’s nature. The Court established that severance was appropriate here since the removal of the phrase left the remainder of the clause intact and enforceable, without any need to rewrite other parts of the contract. Consequently, the Supreme Court reinstated the High Court's injunction, limiting Tillman’s employment opportunities with competitors as per the modified non-compete clause.
This case was landmark for its clarification of severance principles in restraint of trade cases. It highlighted the need for clear and carefully drafted restrictive covenants in employment contracts, as the courts may only sever unreasonable portions that can be removed cleanly, without fundamentally altering the contract's character. This ruling emphasised the judicial preference to preserve enforceable portions of a contract wherever possible, ensuring that contractual restrictions on employees' future employment can remain valid even if parts of those restrictions are deemed unreasonable.
