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Dealing with badly drafted restrictive covenants and final closure on Seldon?

Here are a few updates on previously reported cases:

Courts rewriting restrictive covenants

Some of you may recall that earlier this year in the case of Prophet plc v Huggett, the High Court held that courts could re-write badly drafted restrictive covenants in order to bring them in line with common sense. However, this decision has been overturned by the Court of Appeal.

In Huggett it was held that the restrictive covenants should be rewritten to give effect to the intention of the parties which prevented Mr Huggett selling software which was similar to Prophets software.

In summary the Court of Appeal judge pointed out that although a purposive approach could be taken when a restrictive covenant was ambiguous, this was not the case here, and the clause was simply badly drafted. Given that Prophet had drafted the clause they were stuck with it.

The moral of the story for business owners is ensure that legal advice is sought when drafting restrictive covenants for key personnel.

Is 65 an appropriate age for mandatory retirement?

Avid followers of employment law will recall the well know case of Seldon –v- Clarkson Wright & Jakes, where a former law firm partner complained that it was discriminatory on the basis of age to have a mandatory retirement age of 65.

The appeal courts held that this form of discrimination was capable of being objectively justified and made it clear that legitimate aims could include the achievement of inter-generational fairness or dignity.

The case was remitted to the Employment Tribunal (ET) where it was held that a mandatory retirement age of 65 was a proportionate means of achieving the legitimate aims of retention, planning and collegiality. Mr Seldon appealed to the Employment Appeal Tribunal (EAT) as to whether or not age 65 was proportionate.

The EAT held that the ET were entitled to conclude that 65 was an appropriate age for retirement. The tribunal’s job was to balance the discriminatory effect of choosing a particular retirement age against the success in achieving the legitimate aims. That balance would not necessarily show that a particular age/point could be identified as more or less appropriate than another.

Business owners should note that the position might have been different post the abolition of the default retirement age and changes in the state pension age therefore it is essential to take legal advice before making decisions for mandatory retirement ages.

If I can provide you with any further assistance on drafting or advising on restrictive covenants or retirement policies, please do not hesitate to contact me for a free consultation on 0113 350 4030 orsamira.cakali@scesolicitors.co.uk.


Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here. 

Samira Cakali

Samira Cakali is a pragmatic and approachable solicitor advocate with extensive contentious and non-contentious experience in the fields of employment law as well as civil litigation, within a range of commercial businesses from SME’s to multinationals as well as senior executives.

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