Case law updates

Restrictive covenants: In 2019, in Tillman v. Egon Zehnder, the Supreme Court clarified that unreasonably wide words in a covenant can be severed from post-termination restrictions, provided that what remains does not lead to a major change to the overall effect of the covenant. The extent of this severance has now been considered by the Court of Appeal (CoA). The claimant was a senior employee in a niche pharmaceutical business, and when he resigned to join a competitor, his employer sought an injunction to enforce his 12-month non-compete. The High Court granted the injunction but severed the covenant in doing so. The employee appealed, arguing that the severed wording significantly changed the nature of the restriction and, in any event, left the restriction too wide to be enforceable. The CoA disagreed – the High Court had been entitled to sever the covenant at an interim stage as it was not plainly or obviously incapable of severance. The CoA accepted the clause was widely drafted but held it could be justified in the context of a highly specialised business; the restriction was clearly aimed at preventing competition of specialist activities and not wider pharmaceutical business, and its scope was in the contemplation of the parties when entered in to. Whilst cases of this nature are highly fact-specific, the case provides helpful clarity on the scope of the Tillman severance principles. (Boydell v. NZP Ltd)

Employment tribunals – bias: Two cases this month highlight that apparent bias can hinder the progress of a hearing. In Higgs v. Farmor’s School, a case which is often cited as part of the developing case law on gender critical views, the Employment Appeal Tribunal (EAT) has held that a lay member of the EAT panel hearing the substantial issues should be recused because, at the material times, he held a senior role in an organisation which was taking a strong public position on the issues which were core to the case. Although the lay member had not shared any of his own views publically, the circumstances were sufficient to give an appearance of bias, which rendered it inappropriate for him to sit on the panel. Similarly, in Rolec Electrical and Mechanical Services v. Georgiou, an employment judge’s interventions during a hearing, including some interruptions and quips at the respondent, were considered sufficient to conclude that there was a real possibility of bias, leading to his decision being set aside and the issues being reconsidered by a new tribunal.

Employment tribunals – heads of claim: An EAT decision demonstrates that the categorisation of claims by an employment tribunal (ET) following a preliminary hearing is not necessarily correct. In this case, an unrepresented claimant referred to ‘discrimination based on nationality’ on his claim form, which was categorised as a direct discrimination claim after the preliminary hearing. However, the EAT held that on a proper analysis, his claim was one of indirect discrimination. It was relevant in this case because although his direct discrimination claim had been struck out for late payment of a deposit order, the claim could be reinstated under a different head of claim. A cautionary tale for employers! (Lasdas v. Vanquis Bank Plc)