Member Article

In a case decided on the 4th May 2022 (case number 524/14), the Court of Appeal held that a restriction contained in an employment contract which prevented an employee from soliciting or interfering or endeavouring to entice a customer away from the company after termination of employment, for a period of two years, could be enforced by the employer. The First Hall of the Civil Court had decided that since the clause was not restricted to customers with whom the employee had dealings with during his employment, then the clause was null. The Court of Appeal however decided that the clause could be held to be null only in relation to those customers with which the ex-employee did not have dealings during his employment and not in its totality. The Court commented that the clause in question was reasonable since it was limited to a two year period post-termination, and it only prohibited interference with clients of the employer and other persons who had dealt with the company in the previous two years prior to termination.

The end result of the case did not change despite a different interpretation being given by the two courts. In this case, the Court of Appeal did not enforce the clause in question since it found that the company’s client to whom the ex-employee had provided his services had remained a client of the company and it had not resulted that the company had suffered any damages. Therefore, the breach by the ex-employee was considered to be too insignificant to justify the imposition of the contractual penalty.

Disclaimer

This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr Christine Calleja

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