Restrictive covenants

Case 8: The facts

David Forshaw and Christopher and James Chorley were all dismissed when they refused to sign new contracts incorporating restrictive covenants that limited the kind of work they could undertake if their employment ended.

Their employer said the dismissals were fair for "some other substantial reason", because it was legitimately trying to protect its business interests and the employees were acting unreasonably in refusing to sign the contracts.

The ruling

The Employment Appeal Tribunal (EAT) held that the restrictive covenants were too wide, as they imposed a 12-month nationwide restraint on the employees; for this reason, they were probably unenforceable.

It was unreasonable, the EAT said, to expect the employees to sign an unfairly wide restraint clause; dismissing them for refusing to sign it was unfair.

Forshaw v Archraft Ltd and Chorley & Chorley v Archcraft Ltd UKEAT/0677&0678/04