The recent High Court judgment in the case of Dare International Ltd v Stephen Soliman and Ashley Hikmet [2025] EWHC 227 (KB) has brought to light significant considerations regarding the enforceability of post-termination restrictions, particularly within the financial services sector. This case is notable for its examination of the circumstances under which such restrictions can be enforced, especially when employees are on sick leave during their notice periods. The judgment provides valuable insights into the legal principles governing post-termination restrictions and the factors that courts consider when determining their enforceability.
Background of the case
Dare International Ltd, a proprietary trading company in the energy derivatives market, faced a situation where two of its senior traders, Stephen Soliman and Ashley Hikmet, resigned to join a competitor, Onyx Capital Management Limited. Both individuals were subject to a 12-month notice period and various post-termination restrictions, including non-compete, non-solicitation, non-dealing, and non-poaching clauses. Following their resignations, both Soliman and Hikmet went on sick leave for the entirety of their notice periods, citing health issues. Dare International challenged the authenticity of their absences and sought to enforce the post-termination restrictions through legal proceedings.
Legal principles and court's decision
The starting point for assessing the enforceability of post-termination restrictions is the principle that such restrictions are generally void as they restrain trade and are contrary to public policy. However, they can be enforceable if the employer demonstrates that the restrictions are no more extensive than necessary to protect a legitimate business interest. In this case, the court focused on the non-compete restriction, which is often the most stringent and restrictive provision. The court found that a 12-month non-compete period was reasonable given the shelf life of the confidential information Dare sought to protect.
The court's decision varied for the two individuals involved. For Stephen Soliman, the court found that his health issues were genuine, and since he had been out of the market with no access to confidential information for 12 months, injunctive relief was not granted. In contrast, Ashley Hikmet's absence was deemed not genuine. The court found that he had refused to work during his notice period, engaged in preparatory work for Onyx, and disclosed confidential information to Onyx. Consequently, the court granted injunctive relief against Hikmet, enforcing the non-compete covenant for the full 12-month period and an additional month's springboard relief due to the competitive advantage he gained.
Implications for employers and employees
This case underscores the importance of employers ensuring that post-termination restrictions are carefully drafted to protect legitimate business interests without being overly restrictive. Employers must be prepared to provide evidence that the restrictions are necessary and reasonable in scope, duration, and geography. The court's willingness to enforce a 12-month non-compete restriction highlights that such provisions can be upheld if they are justified by the need to protect confidential information with a limited shelf life.
For employees, the case serves as a cautionary tale about the potential consequences of breaching post-termination restrictions. Employees should be aware that courts will scrutinise the genuineness of any claimed sickness absence and may enforce restrictions if the absence is found to be a ruse to avoid contractual obligations. The decision also emphasises the need for employees to provide valid medical evidence to support claims of genuine sickness absence.
Practical considerations for drafting and enforcing restrictions
Employers should take several practical steps to ensure the enforceability of post-termination restrictions:
Drafting clarity: Ensure that restrictions are clearly defined and tailored to protect specific business interests. Avoid overly broad or vague language that could render the restrictions unenforceable.
Legitimate interests: Clearly identify and document the legitimate business interests that the restrictions are intended to protect, such as confidential information, customer relationships, and workforce stability.
Reasonableness: Assess the reasonableness of the restrictions in terms of duration, geographical scope, and the activities they prohibit. Consider whether the restrictions are necessary to protect the business interests at the time they are imposed.
Medical evidence: In cases where employees claim sickness absence, employers should request contemporaneous medical evidence and consider occupational health assessments to verify the genuineness of the absence.
Enforcement strategy: Be prepared to take swift legal action to enforce restrictions if necessary. Delays in seeking enforcement can weaken the employer's position and may result in the court refusing to grant injunctive relief.
The Dare International Ltd v Soliman & Hikmet case provides a comprehensive examination of the factors that influence the enforceability of post-termination restrictions. It highlights the need for employers to carefully draft and justify such restrictions to protect legitimate business interests effectively. For employees, the case serves as a reminder of the potential legal consequences of breaching contractual obligations and the importance of providing genuine medical evidence when claiming sickness absence. As the legal landscape continues to evolve, both employers and employees must remain vigilant in understanding and navigating the complexities of post-termination restrictions.
This article was created with insights from Lex HR - your always-on HR legal assistant. Lex HR helps HR professionals navigate complex employment law with confidence, providing real-time, reliable advice tailored to your needs. Try it free today and see how much easier compliance can be.
