Restrictive Covenants and the Need to Prove Harm

In a Scottish case the Court of Sessions has confirmed that even if an employer can show that a restrictive covenant is reasonable (for example, an obligation not to disclose confidential information or not to entice or solicit away any employee or customer or client of the company) the employer must still show that it has suffered harm if the restrictive covenant is breached.

The salesman employee had moved to a company that had manufactured equipment which he had sold on behalf of his employer, and the employer was no longer selling that equipment. Therefore, the Court of Sessions held that the confidentiality clause had no teeth since there was nothing which could be argued to be confidential. In addition, the employer's business was predominantly selling to local authorities.

It was successfully argued that, because the business involved compulsory competitive tendering, there could be no damage to the employer's goodwill or customer connection when an employee went to a competitor, because at the end of each contract the local authorities would need to enter into tendering processes with rival firms.
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