It has been widely reported that following his dismissal from Top Gear by the BBC on 25th March 2015, Jeremy Clarkson has been in discussions with rival broadcasters regarding the possibility of making a similar show. However, a suggestion then emerged that Clarkson would be unable to front such a show due to restrictive covenants that are in his contract of employment with the BBC.
Although the wording of the restrictive covenant is not in the public domain, it is said that Clarkson will be unable to make a similar show for a British broadcaster until April 2017.
How enforceable are restrictive covenants in employment contracts?
In this blog, I consider whether such a restrictive covenant would be enforceable.
Traditionally, English courts have regarded restrictive covenants with some scepticism. They are anti-competitive and can prevent someone from earning a living. The starting point in law is that they are unenforceable unless:
a) They protect a legitimate business interest; and
b) Go no further than is necessary to protect that business interest.
The business interests that are capable of being protected generally fall into 2 categories: confidential information and goodwill of customers or connections.
Does the BBC need to protect a legitimate business interest?
For the BBC to be able to enforce the restrictive covenant, it would be necessary for them to show what the legitimate business interest is. It is not enough for them to want to prevent Clarkson working for a rival broadcaster because he is popular and such a show is likely to be successful. For example, in the case of Cantor Fitzgerald (UK) Ltd v Wallace the Judge formed the opinion that it was the personality of a Eurobond trader that made him successful, and this was incapable of being protected by a restrictive covenant.
What, then, might be the legitimate business interest that the BBC relies upon? It’s unlikely to be goodwill of customers since the BBC does not operate that type of business model. More likely, the BBC would say that Clarkson was in possession of confidential information about the future plans for the show, and possession of this information would put him (and future employers) at an unfair advantage.
If the BBC were able to demonstrate a legitimate business interest, they would then have to show that the restrictive covenant went no further than reasonably necessary to protect that business interest. It is for this reason that restrictive covenants are often subject to limitations in terms of geography, passage of time, and the circumstances in which they will/will not operate.
Could the purported duration of the restrictive covenant put its value in question?
If the BBC restrictive covenant purports to prevent Clarkson from being involved in the production of motoring shows for other British broadcasters, this is likely to be regarded as reasonable by an English court (subject to the point about the need for a legitimate business interest). However, it is reported that the restrictive covenant may last for 2 years. If this is correct, then the enforceability of the restrictive covenant is in question. Although there is no hard and fast rule, courts will often refuse to enforce restrictive covenants that last for more than 12 months. The court would consider the length of time that Clarkson would remain a material risk to the BBC’s legitimate business interest; if 2 years goes beyond that material risk, then it is unlikely the court would be prepared to enforce the covenant.
On the other hand, the BBC might argue that the restrictive covenant was negotiated between lawyers and was between parties with equal negotiating power – which is often not the case in an employer/employee relationship.
So – if such a restrictive covenant does appear in Clarkson’s contract with the BBC, is it likely to be enforceable? The answer is a resounding ‘maybe’; it could be some time yet before we see Clarkson et al gracing our screens with a cantankerous take on motoring related issues!
For more information
If you have queries about how to protect your business from departing employees, or if you would like advice on the enforceability of a restrictive covenant affecting you personally, please contact employment solicitors Andrew Buckley in Bedford, Nick Sayer in Cambridge and Maria Gallucci in Milton Keynes. Alternatively please visit our page on restrictive covenants for more information.