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

Pub
  • 09 July 2026
  • Litigation and dispute resolution

The Arbitration Act 2025 – Factsheet

This factsheet outlines the major reforms and key developments introduced by the Arbitration Act 2025, including updates on summary disposal, jurisdictional challenges, emergency arbitrators, arbitrator disclosure duties, and governing law in arbitration proceedings.

art
  • 09 July 2026
  • Immigration

Right to Work Checks are changing from 1 October 2026: Is your business ready?

The Home Office’s new rules, effective 1 October 2026, will overhaul right to work checks and raise the risk of civil penalties for UK businesses.

art
  • 08 July 2026
  • Privacy and Data Protection

ICO prosecutes employee under the Data Protection Act for forwarding client data to his personal email address

The issue of employees taking confidential business information or personal data when moving to a new employer remains a significant concern for businesses.

Pub
  • 07 July 2026
  • Litigation and dispute resolution

Accelerating arbitration: Expedited procedures and key changes in the new ICC Rules – Episode 2

In episode 2, Jack Hobbs (Clarkslegal) and Christopher Howitt (Three Stone) explore how the latest expedited and highly expedited procedures under the ICC Arbitration Rules 2026 are transforming the landscape of dispute resolution.

art
  • 07 July 2026
  • Employment

6 month unfair dismissal rights: What employers need to know

Under the new Employment Rights Act 2025 the minimum period of service required to qualify to bring a statutory claim for unfair dismissal has been reduced from 2 full years to 6 months from 1 January 2027 onwards.  

art
  • 02 July 2026
  • Litigation and dispute resolution

Litigation and Artificial Intelligence: Where are we now?

In the recent case of Cork and another v Smith, the High Court publicly admonished a law firm and two of its solicitors after they had produced and submitted two AI-generated letters to the court containing misleading and false information in relation to a block transfer application made under Rule 12.37 of the Insolvency (England and Wales) Rules 2016.