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Food supplier prevents former employee soliciting its customers
A food supplier has been granted an injunction to prevent a former employee from soliciting its customers for a rival business.
The case involved Fresh Asia Foods Ltd, which specialised in supplying Chinese foods to shops and restaurants.The former employee had worked as its marketing manager. There was a non-solicitation clause in his employment contract prohibiting him from soliciting any business from the supplier's current or potential customers for a 12-month period after termination of his employment.
There was also a non-competition clause prohibiting him from competing with the supplier’s business during his employment and for 12-months post-termination. The employee left the supplier to work for a rival company. The supplier took legal action to enforce the post-termination restrictions. It sought an interim injunction pending trial.
In giving its judgment, the court said post-termination restraints that were reasonable in terms of space or time were likely to be enforced. It was for the employer to show that a restraint was reasonable for protecting its interest, such as confidential information and customer lists: the right did not extend to mere potential customers. Non-solicitation clauses were more favourably looked on than non-competition clauses because an employer was not entitled to protect itself against mere competition on the part of a former employee.
The court therefore granted the injunction in relation to the non-solicitation clause. However, it declined to enforce the non-competition clause because it was wider than reasonably necessary to protect the supplier’s confidential information or trade connections.