Affinity Workforce Solutions Ltd v McCann & Ors

On an interim application to enforce post-termination restraints, the court should apply the American Cyanamid principles but also assess, where the restraint will expire before trial, the likely outcome at trial. A non-compete injunction is not granted merely to prevent competition. The employer must identify a legitimate business interest requiring protection. Targeted non-solicitation and no-dealing undertakings may provide sufficient protection where the relevant customers, candidates and relationships can be identified and policed. Even a valid covenant may be left unenforced where a general injunction would create disproportionate hardship and a substantial risk of injustice. The existing commercial position is a relevant consideration in assessing the balance of convenience.

Affinity sought an interim injunction restraining five former employees from working for Tradewind Recruitment Limited, a competing education-sector recruitment business, during the remaining periods of alleged six-month non-compete covenants. The employees had offered targeted undertakings not to solicit or deal with identified customers and candidates, but Affinity sought a general prohibition on working for Tradewind.

The contractual incorporation and enforceability of the covenants differed between the employees. Some had disputed receiving or agreeing revised terms, and one relied on alleged wrongful dismissal and repudiation. The court therefore had to decide whether a serious issue existed, whether damages were adequate, and where the balance of convenience lay, taking account of the likely result at trial.

1. Interim approach. The court applied the principles in American Cyanamid v Ethicon [1975] AC 396: serious issue to be tried, adequacy of damages, and the balance of convenience or risk of injustice. Where a restrictive covenant will substantially expire before trial, the court must also take account of the likely outcome at trial, following Forse v Secama [2019] EWCA Civ 215 and Lansing Linde v Kerr [1991] 1 WLR 251.
2. There was a serious issue to be tried in relation to each employee. The strength of Affinity’s contractual case varied substantially. In particular, the evidence created significant legal and factual difficulties concerning incorporation of revised covenants, consideration for contractual variation, and the effect of alleged repudiatory dismissal.
3. The ordinary remedy for a valid employee non-compete covenant is an injunction, but the remedy remains discretionary. The categories of circumstances justifying refusal are not closed and the case need not be exceptional. Disproportionate hardship and the absence of substantial damage to the employer may justify refusal: Dyson Technology v Pellerey [2016] EWCA Civ 87.
4. An employer cannot use a covenant merely to restrain competition. Protection must relate to an identifiable business asset or advantage, such as trade secrets, confidential information or valuable customer and candidate relationships. A wider non-compete clause may nevertheless be reasonable where targeted restrictions would be difficult to define or police. The same considerations may inform the discretionary decision whether to enforce the covenant at trial.
5. Affinity had previously accepted that identified customers and candidates could be protected by targeted undertakings. The employees offered court undertakings carrying the additional sanction of contempt. Those protections, the uncertainty surrounding contractual incorporation, the employees’ hardship, and the established status quo in which they were working for Tradewind meant that a general non-compete injunction carried the greater risk of injustice.
6. The injunction was refused. The court accepted the non-solicitation and no-dealing undertakings offered by the employees.