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High Court Reaffirms Strict Rules on Interim Injunctions

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High Court Reaffirms Strict Rules on Interim Injunctions

High Court Reaffirms Strict Rules on Interim Injunctions

In the recent case of Affinity Workforce Solutions Ltd v McCann and Others, the High Court reaffirmed the strict and discretionary nature of interim injunctions.

These are court orders which require a person or group of people to either do, or refrain from doing, a specific act. The case also highlighted the importance of employers and employees knowing their position with regard to terms of employment following TUPE transfers.  

Facts

Five former employees of the Claimant recruitment agency began working for a rival company. The Claimant brought injunction proceedings to prevent them doing this, alleging that they had breached a non-compete clause in their terms of employment – which would prevent them from working for a competitor. These types of clauses are only enforceable if they are reasonable in scope and go no further than is necessary to protect the legitimate business interests of an employer.

The former employees originally began work with the Claimant by way of a TUPE transfer from another company. The transferred terms of employment did not contain a non-compete clause. Therefore, the Claimant produced revised terms which did include such a clause. The issue was whether this clause had been properly incorporated into the former employees’ terms of employment.

Interim injunctions are made entirely at the discretion of the court. In deciding whether to grant an injunction, the court must consider certain guidelines set out in case law. These include whether there is a serious issue to be tried (essentially the court needs to be satisfied that the claim is not vexatious), whether monetary damages would be an adequate remedy instead of the injunction, and an assessment of whether the balance of convenience favours the grant of the injunction. That final element of the test is where the court asks itself: will it do less harm to grant an injunction which subsequently turns out to be unjustified or to refuse one which subsequently turns out should have been granted?

Outcome

On consideration of the guidelines, the court decided that the first two parts of the test were met. However,  the “balance of convenience” was against the grant of the injunction for two main reasons: firstly, the Claimant had initially tried to rely on narrower no-dealing and non-solicitation clauses from the former employees, which would prevent them from dealing with former clients and candidates, rather than attempting to rely upon a broader non-compete clause, which would prevent them from working in competition at all. In the court’s view, this demonstrated that the Claimant accepted that these narrower undertakings would have been sufficient to protect their legitimate business interests without the need for a non-compete clause. Secondly, the non-compete clause upon which the Claimant was trying to rely was due to expire in January 2020. Therefore, to grant the injunction would most likely put the former employees out of work just a few months before this point. Accordingly, the court considered that this outcome would constitute a substantial injustice.

Consequently, the court refused to grant the injunction.

Our tips for employers and recruiters

  • If you discover that former employees are in breach of non-compete or other such terms of employment, make sure to act upon this immediately. Delay can harm the strength of any case you may bring later on.
  • Ensure that your legitimate business interests are adequately protected by the terms of employment you have explicitly included. Could you justify them to a court if challenged?

Our tips for employees

  • If your current (or former, as was the case in Affinity) employer attempts to enforce certain terms of your employment contract, ensure that the term is actually included in the written document.
  • If your former employer seeks undertakings from you that you will comply with your ongoing obligations, offering these may help you in the event that they do seek an injunction, or may resolve the dispute altogether.

Affinity Workforce Solutions Ltd v McCann and others [2019] EWHC 2829 (Ch)

If you would like to discuss any of the issues raised in this article, or need any advice, please contact Olivia Morton or give us a call on 0345 070 6000.

This article was prepared by Tom Revitt