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
  • 17 February 2026
  • Employment

The Employment Rights Act – A shift in power: why employers will face greater pressure from industrial action and union relations in 2026

Substantial union-related changes under the Employment Rights Act 2025 will take effect on 18 February 2026, ushering in significant shifts in the legal landscape for industrial action in the UK.

art
  • 16 February 2026
  • Immigration

High Potential Individual Visa (HPI Visa) – UK Immigration Route

The High Potential Individual (HPI) visa is a UK immigration route designed to attract recent graduates from top-ranked international universities.

art
  • 13 February 2026
  • Employment

Businesses Prepare for Stronger Trade Union Rights: Monica Atwal Comments

The new trade union rights introduced by the Employment Rights Act 2025 will come into force on 18 February 2026. These changes are expected to make strikes easier to organise and will extend protections for striking workers. Monica Atwal comments on the implications of these reforms in People Management magazine.

art
  • 12 February 2026
  • Privacy and Data Protection

Love is in the air: Is it data at first sight?

As we enter the week of Valentine’s Day, it is important to recognise the significance of data security, particularly where we have seen the number of cybersecurity breaches increase over the last few months.

art
  • 10 February 2026
  • Commercial Real Estate

Can a tenant terminate their lease if the premises are no longer needed?

Ending of the lease is most likely not high on the priority list when a tenant is taking up a new lease.

art
  • 05 February 2026
  • Immigration

Indefinite Leave to Remain (ILR) – Debating the future of Settlement

On 2 February 2026, a Westminster Hall debate brought an unusually focused spotlight onto a part of the immigration system that is often discussed in technical terms but rarely examined in such public and political detail: Indefinite Leave to Remain.