Restrictive Covenants Enforceable

The QBD has handed down judgment in Kynixa Ltd v Hines, a restrictive covenant case.

Mr Hynes, Ms Preston and Ms Smith worked for Kynixa. All three left and went to work for a separate organisation with which Kynixia had dealings. None of the three warned Kynixa that this was where they were going to work and it was some time later before Kynixia discovered what had happened.

In the High Court Wyn Williams J held that given the senior positions they held, all three employees were in breach of their fiduciary duties. Two were also in breach of restrictive covenants contained within a shareholders' agreement. The question, then, was whether these restrictive covenants were enforceable. They purported to bind the employees for 12 months after they ceased connections with Kynixia. It was argued that this was too long a period.

At paragraphs 130 - 141 of his judgment Wyn Williams J set out a detailed analysis of the law on restrictive covenants. He then concluded that in all the circumstances 12 months was a reasonable period and that, although the restrictive covenants were very wide, even so they were reasonable and enforceable.

[Thanks to www.emplaw.co.uk for giving permission to use their summary of this case.]