On 30th September 2018 we are moving our Tamworth Office to Pacific House, a new spot on the outskirts of the town, conveniently located directly off Junction 10 of the M42 motorway. There will be no disruption to business, the service that you receive...
The Brakes Are Off On Jeremy Clarkson's New Ride
Amazon Prime Video have announced that the former Top Gear trio of Jeremy Clarkson, Richard Hammond and James May will present a new car show for them after signing a “landmark global TV deal”.
For those who are not aware of the ‘facts’ surrounding Clarkson’s dismissal, he was dismissed for assaulting a producer. As an employment solicitor, I obviously agree that this may be a ground for dismissal for gross misconduct. However, the interesting part of this saga is that the trio have got around their contracts with the BBC, which allegedly contained a non-compete clause preventing them from hosting a car show for a UK television channel for the next two years, by signing for the US based internet streaming giants.
A non-compete clause is a type of restrictive covenant which seeks to restrict an employee from working for a competitor or setting up in competition.
The starting point when considering a restrictive covenant is that they are unenforceable unless they were reasonable at the point they were entered into, protect a legitimate business interest (e.g. confidential information or goodwill) and do not go further than reasonably required to protect that business interest.
Your employees may have access to information that is sensitive to your business and which you would not want ending up in the hands of a competitor. The Top Gear brand is reportedly worth £50 million a year– you can understand why the BBC would want to protect it by imposing a non-compete clause. The ‘legitimate business interest’ in this matter is arguably confidential information about what is required to create a highly successful show which Clarkson would have knowledge of.
Restrictive covenants are usually limited in terms of geography and a time frame. The time frame of two years may seem a long period of time, however it can be argued that two years is a reasonable period for which Clarkson would remain a material risk to the BBC’s legitimate business interest.
The non-compete clause reportedly only went as far as protecting the interests in the UK. The show is watched by around 350 million viewers worldwide; would it therefore have been reasonable to include a global territory? Worldwide covenants have been held to be enforceable, however, such decisions are rare and a court will always balance the merits of the situation.
This matter highlights the importance of reviewing restrictive covenants to ensure your company’s business interests are protected adequately.
My top tips when considering restrictive covenants are:
- Establish the business interest which you are proposing to protect;
- Tailor each restrictive covenant to your business and the individual employees and their particular job role as a ‘one size fits all’ approach risks being unenforceable;
- Separate your requirements into separate restrictive covenants as they are likely to be deemed as severable if one is found to be unenforceable;
- Provide your employees with consideration for agreeing to the restrictive covenants;
- Review your employees’ restrictive covenants and update them when they are promoted or their role changes (do not forget to provide consideration for any changes which are made).