What happens when an employee serving notice informs the employer of their objection to a transfer? Does this terminate the employment? What happens to their post termination restrictions? These issues were looked at in the recent case of ICAP Management Services v Berry & Another (2017).
Mr Berry was employed by ICAP Management Services as the CEO of Global E-commerce. His contract of employment provided for a 12 month notice period and the ability for ICAP to place Mr Berry on garden leave in the event of his termination. Mr Berry’s contract also contained various post termination restrictions, in particular a six month non-compete clause and a nine month non-solicitation clause. There was provision for any period of garden leave to be “set-off” against the time period of the post-termination restraints.
The employee gave notice to terminate his employment with ICAP in July 2016 and was immediately placed on garden leave. His notice period was due to run until July 2017. Five days later it was announced by the 2nd Defendant, a competitor company, that Mr Berry would be joining their business.
In December 2016, ICAP was to be acquired under a takeover and a TUPE transfer would follow. Mr Berry, at that point still on garden leave, objected to the TUPE transfer and considered that his objection had therefore resulted in the immediate termination of his employment. ICAP requested undertakings from Mr Berry that he would not take up his new role until the expiry of his notice period. However, Mr Berry refused to give these undertakings and, shortly afterwards, started his new job.
ICAP applied for an injunction prevent to Mr Berry working for the competitor company until July 2017 (the expiry of the notice period).
The High Court found that:
- ICAP had demonstrated it had a legitimate business interest to protect (in terms of client connections, strategy, and relationships) given Mr Berry’s seniority.
- Damages would not be an adequate remedy in the circumstances.
- The Court rejected Mr Berry’s submission that his information was now out of date or had been forgotten.
- Although Mr Berry had an arguable case that his letter of objection terminated his employment, there was no evidence on this before the Court.
The Court therefore granted an interim injunction until 5 May 2017 with a speedy trial ordered on 26 April 2017.
This case highlights the key considerations around business protection and the competing factors the court assesses when deciding interim injunction applications. It also emphasises the importance of ensuring post termination restrictions are reasonable and do not go further than what is required to protect the business. It is necessary to continually review your post termination restrictions to ensure they are appropriate for the employee and where suitable include a garden leave set off provision.
For more information about our contract and business protection review services or our business protection HR and manager training courses, please speak to our Employment Team on 0118 952 7284 or contact us at [email protected]
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.