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Non-solicitation Clauses: Update

Tuesday, 20 March 2012

Employees in client-facing roles will often find that they are bound by restrictions on their freedom to contact former clients when they move on from their current employer. These restrictions usually take the form of non-solicitation clauses and non-dealing clauses. The provisions aim to prevent the poaching of former colleagues and clients. The recent case of Towrey EJ Limited V Barry Bennett has shed light on what “solicitation” actually means and how it applies in practice.

Defining “Solicitation”
On the face of it ‘solicitation’ appears straightforward enough but establishing what sort of behaviour is actually encompassed can be less so. In Towrey EJ Limited V Barry Bennett, Mrs Justice Cox set out a general definition - a breach has occurred if an employee:
“Directly or indirectly requests, persuades or encourages clients of a former employer to transfer their business to their new employer.”

Showing That A Breach Has Occurred
Defining what constitutes a breach leaves the question of what falls within that definition. An employer must show that a former employee has requested, persuaded or encouraged but how might this be evidenced?

In Towrey EJ Limited v Barry Bennett, the court did not consider it as simple as showing that a “tidal wave” of clients had moved to the business where those former employees now worked. On the face of it, Mrs Justice Cox did not consider that a large number of clients moving inferred evidence of requesting, persuading or encouraging by former employees. Rather the former employer had to prove that such behaviour took place which, in the circumstances, would have required cross-examination of former clients. In proving solicitation, the employer would also have to show that former clients had not simply moved out of a sense of loyalty towards the former employee.

Although, the “tidal wave” of moving clients was not enough to convince the court that solicitation was present in this case, Mrs Justice Cox did not rule that an inferential case would be impossible.

Under the scrutiny of the courts, non-solicitation clauses often fail to provide employers with the level of protection that they might perhaps otherwise have envisaged. The difficulty for the employer in this case once again demonstrates the merits of the more robust non-dealing clauses. If employees had been bound by non-dealing clauses they have been unable to work for former clients whatever those clients might have wished for.

If you would like more information regarding non-solicitation clauses, non-dealing clauses or any other employment law matters, Rollingsons has experienced employment law lawyers who can advise you. Please contact Aneil Balgobin via e-mail or by telephone on 0207 611 4848.