...moonwalking out of a contract
A Michael Jackson tribute act, who joined a rival show in breach of his former contract, has been told by the High Court he can continue performing. Aneil Balgobin, a Solicitor specialising in Employment Law, examines the case and looks at restrictive covenant clauses in employment contracts.
It was destined to be a courtroom ‘Thriller’, but the white glove remained well and truly on when a High Court Judge told the entertainment company bringing the action to ‘Beat It’.
Craig Harrison, an ex-soldier, had been performing as Michael Jackson in the Legends show at the Sands venue, Blackpool. After his contract expired in December 2015, he joined the rival Kings and Queen of Rock, Pop ‘n’ Roll at the Central Pier Showbar. This was despite his former contract stipulating that he could not join a competing Blackpool show for a period of 12 months after leaving.
Restrictive Covenant clauses in employment contracts
Restrictive covenants – sometimes referred to as ‘post-termination obligations’ – are used by some employers to place a timeframe on how soon an employee can go and work for a rival business once they have left the company. This could be to protect confidential information that might give an unfair advantage to a direct competitor.
Although they are an accepted part of modern business, restrictive covenant clauses are not always enforceable. It all depends on how they have been drafted. If they are too broad in their scope, essentially preventing an ex-employee from plying their trade and earning a living, a court is more likely to find the clauses to be invalid. General considerations are:
• Is the covenant limited in time?
• Are the geographical restrictions reasonable? (A clause banning an employee from trading anywhere in the UK will generally be frowned upon)
• Does the covenant go beyond what is essentially needed to protect the organisation’s business interests?
A ruling is made based upon how the restrictive clause meets these considerations.
In the case of the Michael Jackson tribute act, the covenant was both time-limited and restricted to the Blackpool area. In fact, the clause was ruled by Mr Justice Edis to be legally valid and Mr Harrison would have been in breach of his contract had the case been brought earlier.
However, proceedings were delayed until the beginning of May, with no explanation offered as to why, prompting the Judge to conclude that they had been timed to cause “avoidable damage, loss and disruption” to the rival show.
The claim was dismissed.
Aneil Balgobin says:
“It isn’t uncommon for an employer to insert restrictive covenant clauses into an employee’s contract. Indeed, for many businesses it is essential. This could be to safeguard the employer’s confidential and business sensitive data and trade secrets; it might be to prevent an ex-employee approaching existing and prospective customers with the intention of soliciting their business. There are other ways in which these covenants can manifest.
“In this particular case, it was a non-compete clause, which prevented Mr Harrison performing in a rival show in the Blackpool area for a period of 12 months.
“Once signed, these clauses can be legally binding and many people do not take independent advice beforehand. The consequences and ramifications connected to breaching restrictive covenants can be costly and severe – that is why we always urge anybody beginning a new job to read and be confident that they fully understand their contract of employment. That way they can be fully aware of what is required of them when they leave.”
Written by Aneil Balgobin
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