Sterilising Talent: A Critical Assessment of Injunctions Enforcing Negative Covenants

Abstract

The law favouring the grant of injunctions to enforce negative covenants in employment contracts is producing mischief and requires review. The author argues that in cases involving the enforcement of post-employment restraints which sterilize the capacity of employees to continue a career, plaintiff employers should be put to the test of proving damages. A number of principles support this view, not the least being that the grant of such injunctions can be punitive, and most certainly anti-competitive. Combined with a general weakening of the doctrine making illegal restraints of trade that go further than is reasonable to protect a legitimate business interest, and a readiness to recognise a ‘stable workforce’ as such an interest, injunctions enforcing restrictive covenants have enabled employers to restrict the career choices even of employees who have not signed such agreements.

Keywords: Employment contracts, restrictive covenants, restraint of trade, equitable injunctions

JEL Classification: K10, K30, K31