When disciplinary processes and non-compete clauses implode

Many modern companies insist on the inclusion of restrictive covenants to limit the freedoms of employees upon the termination of their contracts. However, the High Court recently reinforced the stringent legal principles governing the enforceability of such restrictive covenants, suggesting that they often overstep.

A young man had been working as a salesperson for a UK subsidiary of an American company that sells made-to-measure suits and shirts manufactured in the USA. His original contract included restrictive covenants limited to 6 months. However, the contract was changed in 2022 to double the duration of the non-compete covenant to 12 months and remove the previous reliefs, significantly widening their scope. The employee asserted that he was not informed of these changes, and the claimant failed to produce any evidence to justify the widening of the scope of the limitations or the doubling of their duration.

The employee’s initial performance was strong, although following a conduct issue in January 2025, he was subjected to an addendum requiring humiliating and intrusive conditions, including weekly “counselling”, a ban from earned trips, and exclusion from leadership roles. The ex-employee had also raised product quality concerns, which he felt were ignored, and found the work culture ‘toxic’ and the disciplinary action both unfair and intrusive. As a consequence, he resigned in frustration in 2025, only to be subjected to an “insensitive, verging on brutal” retaliation. Within two days, the HR manager had cut off all IT access, threatened an investigation, and banned the defendant from the office. A day later, on Sunday, the claimant’s lawyers hand-delivered a threatening letter to the defendant’s home seeking to enforce a 12-month restrictive covenant. Moreover, there were claims that the defendant had breached his contractual duties, including running down his sales in the months prior to his resignation, and soliciting staff.

The High Court dismissed the claim for breach of contract and ruled that the 12-month restrictive covenant was unenforceable, as it far exceeded what was reasonably necessary to protect the claimant’s business. Moreover, the Court found the decline in performance to be stress-related and due to his inevitable demotivation.

This case reinforces the longstanding principle that courts will not uphold a covenant if it extends beyond what is strictly necessary to protect an employer’s legitimate business interests, which are typically delimited to confidential information and customer goodwill. The case serves as a warning in relation to the risks employers run when their conduct is perceived to be heavy-handed, humiliating, or toxic, particularly during disciplinary or exit procedures. HR departments should be wary of engaging in overtly humiliating or heavy-handed disciplinary rituals, as these may be viewed as a form of brutality.

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