This week’s case roundup
Two-year restrictive covenant excessive
Barry Allsuch & Co v Harris, High Court, IRLB 680
Harris was employed by Barry Allsuch estate agents from 1998 as a sales
manager in its Radlett and Elstree office. In October 2000 he was dismissed and
in February 2001, it was discovered he was working for a rival firm in the same
town.
His former contract of employment had contained a restrictive covenant to
the effect that he could not work in any estate agents in the Radlett area for
a period of two years. Barry Allsuch sought an injunction to restrain him from
continuing in his new post.
The Court accepted that Barry Allsuch relied on trade connections and it was
not necessary to prove they were exclusive or long-established. Covenants have
to protect legitimate business interests but should extend no further than is
reasonably necessary, otherwise they will be void for illegality.
Harris had been employed for two years and five months, albeit as a manager,
but only around 5 per cent of Barry Allsuch’s customers re-entered the housing
market within a two-year period.
The Court observed that non-competition covenants were imposed by other
estate agents for a maximum period of six months.
Although not conclusive, this was evidence of what is usual in the trade.
Taking all relevant factors into account, a restricted period of two years was
unreasonably long and the injunction was refused.
Ten weeks’ pay for failure to consult
Elkouil v Coney Island Limited, EAT, unreported December 2001
Elkouil was made redundant after his duties were gradually transferred
elsewhere. The tribunal found that he was genuinely redundant, but awarded him
two weeks’ pay for lack of consultation.
Elkouil appealed to the EAT on the basis that his employers were aware of
the risk of redundancy seven months in advance of the dismissal and should have
warned him.
The EAT rejected the argument that an employer has two separate duties,
first to warn and then consult. Warnings are part of the consultation process.
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However, the tribunal allowed itself to be forced into a straightjacket by
what has become a conventional method of expressing compensation payable for
non-consultation in redundancy cases, namely two weeks’ pay. This was
inappropriate in Elkouil’s case.
Based on the specific facts, Coney Island had known at least 10 weeks in
advance that Elkouil would be made redundant and he thereby lost the chance of
looking for alternative employment during that period. The EAT substituted an
award of 10 weeks’ pay.
