Sean McHale

sean.mchale@legalstudio.co.uk

DISPUTE RESOLUTION SOLICITOR - RESTRICTIVE COVENANT SPECIALIST 


As a commercial dispute and employment solicitor I specialise in advising clients in relation to restrictive covenants - specifically injunctive relief against team and individual moves of senior management, breach and enforcement of restrictive covenants, misuse and removal of confidential information and trade secrets by employees, taking of/competition in relation to existing clients.
 
I have represented clients in the Court of Appeal, High Court and Employment Tribunal. I have also acted for the Vegan Society in respect of cases their members were pursuing regarding issues pertaining to vegan rights.
 
Prior to joining Legal Studio, I have worked at Levi Solicitors LLP, Hawkswell Kilvington and Irwin Mitchell.

Specialist Areas of Interest

Employment Law

Construction Law

Dispute Resolution

Professional Negligence

Sean's Latest Blogs

Restrictive covenant clauses within employment contracts restrain how employees can act in the future. Ordinarily, this relates to dealing with clients of their employer, or working for a competitor following the termination of their employment. To justify a restraint of trade clause it must be proved that the clause is reasonable and in the interests of the parties. Generally, the courts will not enforce provisions relating to mere competition. It must be established that there is a legitimate interest which requires protection – for example, confidential documents, lists of clients or specific details within contracts.
 
Once a legitimate interest is identified, the restrictive covenant in question needs to be no more extensive than is necessary to protect that interest – i.e. limited in scope and time. The courts are much less sympathetic to restraints within employment contracts as opposed to in commercial contracts as it is understood that usually employees are in a weaker bargaining position than employers. The enforceability of restrictive covenants is highly fact specific and will depend upon the wording of the clause.
 
Let’s look at previous decisions relating to restrictive covenants and their enforceability and reasonableness.
 
Garden Leave
 
In one case the High Court was asked to consider whether a stockbroker could be placed on garden leave for the entirety of his 12-month notice period. The court considered that the provision was reasonably necessary to protect the company’s legitimate business interests. The stockbroker had signed a revised contract which included the clause and also increased his salary from £40,000 to £120,000.
 
In a further case relating to garden leave, an employer was entitled to place three employees on garden leave during the period of their notice period despite there being no garden leave clause within their employment contracts. This was due to the fact that the employees had breached their contracts and there was no onus upon the employer to provide work to the employees due to the breaches.
 
Non-Compete
 
A financial adviser had a restrictive covenant that prevented him from providing any services for a period of 9 months following the termination of his employment. However, this was ruled invalid as the adviser had been working with a client base in one particular region of the country. Furthermore, the length of the covenant was deemed too long as he had left his employment after only six months.
 
A six month non-compete clause was deemed invalid for a junior employee as the considered it was inappropriate for someone of that level. The clause was also deemed unenforceable as the scope was too wide. The clause sought to restrain the employee from being engaged in work of a similar nature to that of the employer to the employer’s questions – it was deemed too wide as it concerned all customers not solely those of which the employee had knowledge of or dealt with previously.
 
For more information, please contact Sean McHale on 0113 247 3800 or by emailing sean.mchale@legalstudio.co.uk
  2022 48 04
Sean McHale
What is a Settlement Agreement?
 
A settlement agreement is a legally binding contract between an employer and an employee which brings the employee’s employment to an end. In essence, the employer terminates the employee’s employment in return for paying the employee a sum of money.
 
What sum of money should the employee receive?
 
The amount of money paid to an employee under a settlement agreement is discretionary. However, primarily, the employee will be entitled to payment of their notice pay and redundancy payment (which is dependent upon the employee’s age and the number of years which they have worked at the company). However, depending upon whether the employee has worked at the company for longer than 2 years, and dependent upon the circumstances of the end of the employee’s employment, they will be entitled to a further payment. As to the exact amount, the employee and employer will need to take advice from an employment law specialist. Relevant factors will include:
 
  • The seniority of the employee;
  • The validity or complexity of any claims;
  • The circumstances of the departure, whether it is on good terms or otherwise.
 
Can the employee still pursue a claim against the employer after signing the settlement agreement?
 
In order for the settlement agreement to be legal binding the employee must take independent legal advice. However, once this done the employee can no longer pursue a claim against the employer, save for any which have been exempted (usually in relation to pensions or an injury/illness of which the employee may not be aware).
 
Is an employee compelled to accept a settlement agreement?
 
There is no obligation upon an employee to accept a settlement agreement once it is proposed to them. However, there will almost always be circumstances which have led to a settlement agreement being offered – such as a breakdown in the relationship, a redundancy situation or pending disciplinary proceedings.
 
What happens to bonus payments?
 
The employee will need to be aware that if their termination date arrives before the date for payment of a bonus then they shall not be entitled to payment of the bonus. Therefore, either the termination date shall need to be amended to occur after the date of the bonus payment, or payment of the pending bonus made as part of the terms of the settlement agreement.
 
Is the Termination Payment tax free?
 
Yes, the termination payment is tax free up to a limit of £30,000.00 pursuant to the Income Tax (Earnings and Pensions Act) 2003. However, notice and salary payments under the settlement agreement shall be taxed in the usual way.
 
For more information please contact Sean McHale on 0113 247 3800 or by emailing sean.mchale@legalstudio.co.uk
 
 
  2022 34 04
Sean McHale