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Restrictive Covenants

Ryanair took the case against Peter Bellew, it's former Chief Operating Office (COO) who had resigned in July 2019 to take up a position as COO with one of it's main competitors, Easy Jet. Mr Bellew's employment contract contained a number of restrictive covenants which included the following :

"For a period of 12 months after the termination of your employment you shall not, without the prior written consent of the Company, directly or indirectly in any capacity either on your own behalf or in conjunction with or on behalf of any other person: 1. Be employed, engaged, concerned or interested in any capacity in any business wholly, or partly in competition with the Company for air passenger services in any market".

Whilst the Court did make it clear that restrictive covenants can play a legitimate part in protecting business interests, it found on this occasion that the restriction imposed on Mr Bellew could not be enforced, as it was too broad in its reference to any air line in the market. The Court said the restraint needed to be specific to roles where there was a relevant risk of disclosure of sensitive commercial information related to Ryanair, and what would be only considered necessary for the legitimate protection of Ryanair's interests.

In this regard, it is considered that a narrower restrictive clause that was related to senior roles in similar low cost airlines would have been more likely to have been enforceable.

For employers going forward there are some useful lessons to be taken from this case as often contracts of employment can contain very broad restrictive covenants and non compete clauses across all categories of employees, that may not be enforceable. In addition, restrictive covenants and non compete clauses that are signed up to in a junior role may not subsequently carry any enforceability at a more senior level. It is therefore recommended that they should be drafted in a narrow manner at an appropriate time, and that they relate to a specific role that an employee is carrying out, and where appropriate a specific geographical territory restriction. Such clauses must be reasonable and only presented in the context of necessarily protecting an employer's legitimate business interests, and will always need to be balanced against an individual's right to earn a livelihood.


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