Search

How can we help?

Icon

Restrictive covenants – employers watch out

Employers can be liable for inducing a breach of a restrictive covenant, but relying on legal advice can provide a defence as held the Court of Appeal in Allen v Dodd & Co Ltd.

Prior to employing Mr Pollock, Dodd and Co sought legal advice on his current employment contract with David Allen Chartered Accountants (‘Allen’), in particular his post-termination restrictions. The legal advice was that it was “more probable than not” that the restrictions would be unenforceable. Relying on this advice, Dodd and Co hired Mr Pollock.

Allen subsequently sought to enforce the post-termination restrictions in the High Court, which, after severing some words, held that the restrictions were enforceable against Mr Pollock. As part of their deliberations, the High Court considered whether Dodd and Co were liable for inducing the breach by Mr Pollock. It was held that they were not liable as “they did not turn a blind eye to the employee’s contractual obligations”. This was evidenced by the fact they had obtained legal advice.

Employers can be liable for inducing a breach of a restrictive covenant.

On appeal, Allen’s case was dismissed again. The Court of Appeal held that where “the defendant honestly believes that the act that he procures will not amount to a breach of contract, he is not liable”.  As Dodd and Co had relied honestly on their legal advice and that the advice did not definitively conclude that there would be a breach, they were not liable.

This is a very useful reminder that employers can be liable for inducing a breach of contract. Employers should take legal advice as early as possible in order to understand the risks of that accompany post-termination restrictions; this will help therefore mitigate any risk of inducement.

For more information on restrictive covenants, get in touch with our Employment department.

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Author profile

About this article

Read, listen and watch our latest insights

art
  • 13 October 2025
  • Privacy and Data Protection

AI and Data Protection: key legal developments in 2025 – 2026

The rapid integration of artificial intelligence into the workplace continues to reshape how organisations manage data, recruitment, and decision-making. Alongside this technological shift, UK and international regulators are introducing new legal frameworks designed to balance innovation with accountability.

Pub
  • 13 October 2025
  • Immigration

Spouse Visa UK Guide 2025

Our immigration solicitors have a proven track record of obtaining fiancé, spouse and unmarried partner visa for applicants wishing to come to the UK as the partner of a British/ Irish citizen or person present and settled in the UK.

Pub
  • 13 October 2025
  • Employee Ownership Trust

Get your tech business ready for market

We recommend taking the following steps to ensure your business is best placed to capitalise upon a quick and efficient sale process.

art
  • 13 October 2025
  • Corporate and M&A

Keeping It in the Family: How Family Investment Companies Work

Family Investment Companies (FICs) are becoming increasingly popular as a means of holding wealth for the benefit of different beneficiaries.

art
  • 10 October 2025
  • Employment

Prioritise mental health in the workplace – FAQs

Today is World Mental Health Day, Here are our top ten FAQ’s on reasonable adjustments for mental health at work.

Pub
  • 10 October 2025
  • Public Procurement

Public Procurement Annual Update 2025

Join Chris Tayton and Emma Butcher for the 2025 Public Procurement Annual Update webinar, covering key insights on the Procurement Act 2023, challenges under PA23, and recent case law updates on procurement awards.